Importance of Consumer Surplus in Economics

 While considering the day to day activities we as a buyer always tend to think about the utility we can derive while buying any commodity. In general, it is often seen that the amount which we pay as a buyer to purchase a product is always less than the satisfaction gained while consuming it. On the other hand, there comes a situation at times when the consumer pays a higher amount for commodity then he actually wants to pay. Hence when a consumer receives high utility in compared to the sacrifice made for the commodity, the concept of Consumer Surplus occurs. We can, therefore, say that Consumer Surplus In Economics is the difference between the price consumer is willing to pay and the consumer actually pays.

Often at times, we come across a situation when an individual is ready to pay an extra amount to buy a particular product. This is because he/she gets extra satisfaction for the price they have paid. Hence this is what called as Consumer Surplus.

Consumer Surplus Example

To understand the concept of Consumer Surplus, we can consider the following table mentioned below:

Units	Ready to pay	Actual Amount	Consumer Surplus
1	14	5	9
2	12	5	7
3	10	5	5
4	9	5	4
Total	45	20	25

In the above table, it is shown that when a consumer buys the first unit of product, he is ready to make a payment of Rs 14, whereas the actual price is Rs 5. Hence Consumer Surplus occurs here. Similarly, the consumer is ready to pay Rs 12, 10, 9 for the 2nd, 3rd and 4th commodity, where the original prices are Rs 5 each and thus they get 7, 5 and 4 as Consumer Surplus.