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Individual Consumer Surplus

Definition

Individual consumer surplus refers to the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. It represents the benefit or value that consumers receive from purchasing a product at a lower price than what they were willing to pay.

Analogy

Imagine you're shopping for a new pair of sneakers, and you find your favorite brand on sale for $50 instead of its original price of $100. The individual consumer surplus would be the $50 you saved by getting them at a discounted price.

Related terms

Total Consumer Surplus: Total consumer surplus is the sum of individual consumer surpluses for all consumers in a market. It represents the overall benefit that consumers receive from purchasing goods or services at prices lower than their willingness to pay.

Marginal Benefit: Marginal benefit refers to the additional satisfaction or utility gained from consuming one more unit of a good or service. It helps determine how much an individual is willing to pay for each additional unit.

Demand Curve: The demand curve shows the relationship between the quantity demanded of a good or service and its price. It illustrates how much consumers are willing and able to buy at different prices, which affects their individual consumer surplus.