00:01
Okay, so in this question, we are asked to compare the producer surplus and the consumer surplus in the case of two different demand curves.
00:11
So let's just give a quick refresher of what those two terms actually mean.
00:17
Consumer surplus is defined as the difference between the consumer's willingness to pay, which is, as you learned earlier in the chapter, represented by the demand curve, and what the consumer actually pays for that good.
00:33
Producer surplus is very similar in that it is the difference between the producers ' willingness to supply at a certain price and what they actually receive for selling their product.
00:49
And this willingness to supply is represented by the supply curve.
00:55
And the price that consumers pay and producers supply it is defined as the equilibrium between these two.
01:04
Curves, which is represented by in this case by the dotted line that i drew, and we will call this price p1.
01:15
So, according to the definitions we just gave, producer surplus is easily represented by the area of this triangle right here...