Macroeconomics

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It is simple to see that the demand curve is directly related to the reservation price (the buyer ‘s willingness to pay If buyers wish to pay more for a certain product , then it can be implied that the demand for that product is increasing

When related to the demand curve , the buyer ‘s willingness to pay or reservation price is usually expected to be a straight horizontal line intersecting the demand curve at a point of equilibrium

The consumer surplus can be interpreted as the area above of willingness to pay line and below the demand curve

When there is an increase in quantity , we expect the price of the good to fall and the consumer surplus to increase

This phenomenon is beneficial to consumers who are willing to buy the good or service at a price lower than the previous

Paper Topic: Macroeconomics A buyer ‘s willingness to pay can be more appropriately defined under the term reservation price

Con summer surplus on the other hand is the difference of the actual price from the reservation price

In other words , it is the amount by which consumers benefit from being able to pay less than what they are willing to pay for a particular good or service

If a particular company is selling a box of chocolates at 8 , then consumers who buy that box of chocolates have a consumer surplus of 2

This is the area of prices that are advantageous to customers since it is less than what they are willing to pay

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