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Determining consumer surplus

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The following graph illustrates the market for a breast cancer fighting drug without which breast cancer patients cannot survive. What is the consumer surplus in this market? How is it different from normal markets?

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Solution Summary

The solution discusses the value of consumer surplus in case of given demand and supply scenario. It also discusses how it is different from normal markets.

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Consumer surplus is defined as the difference between the total amount that consumers are willing and able to pay for a good or service (indicated by the demand curve) and the total amount that they actually do pay (the market price). The level of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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