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Economics

Consumer Surplus and Producer Surplus Measurement

Quick fact

The sum of consumer and producer surplus is called 'total surplus,' and economists use it to judge whether a market is efficient—the 'invisible hand' maximizes this total at the free-market equilibrium.

Why this is interesting

You just paid $3 for your morning coffee, but you would have paid $5 for it—what happens to that extra $2? And how much does the café actually gain from selling to you?