Market equilibrium and consumer and producer surplus

Prices and quantities sold in markets are determined by the interaction of buyers and sellers. In this lesson, you will learn about market equilibrium and disequilibrium, as well as a way economists measure the benefits that markets create for buyers and sellers using the concepts of consumer and producer surplus.

Market equilibrium

Market equilibrium

Demand curve as marginal benefit curve

Consumer surplus introduction

Total consumer surplus as area

Producer surplus

Equilibrium, allocative efficiency and total surplus

Consumer and Producer Surplus and Allocative Efficiency