CS Geometry
Consumer Surplus is the shaded area below the demand curve and above the market price line. As price falls, the surplus triangle expands.
Consumer Theory
Willingness to Pay (WTP) is the maximum amount a buyer will pay for a good.
Consumer Surplus (CS) = WTP - Price Paid
| Buyer | WTP | Purchase | CS |
|---|---|---|---|
| Taylor | ₹100 | Yes | ₹20 |
| Carrie | ₹80 | Yes | ₹0 |
| Rihanna | ₹60 | No | ₹0 |
| Gaga | ₹40 | No | ₹0 |
CONSUMER SURPLUS GEOMETRY & WTP
CS = ₹20Consumer Surplus (CS)
The Marginal Buyer
The buyer whose willingness to pay equals the market price. At P = ₹80, Carrie is the marginal buyer — she is exactly indifferent.
Gain to Existing Buyers
When price drops from P₁ to P₂, buyers who already purchased save the difference. Taylor's surplus grows from ₹20 to ₹40 if price falls to ₹60.
Gain to New Buyers
A lower price invites new participants. At P = ₹80, Rihanna and Gaga stay out. At P = ₹60, Rihanna enters with CS = ₹0; at P = ₹40, Gaga enters with CS = ₹0.