Consumer Surplus

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SLMinto.png Introduction

What is the concept of consumer surplus ?

Then concept of consumers’ surplus is originally introduced by aFrench engineer, Arsene Julis. Dupuit in 1844. Then it is propounded by Alfred Marshall and Prof J.R. Hicks. According to Marshall there are several low price goods ‘These goods are daily part of our consumption. Such goods are indispensible in our day today life. Consumer cannot deal his day without the consumption of the goods e.g. Tea, Coffee, Tobaco, News paper etc. According to Marshall in the event of non availability of such goods consumer is ready to pay much higher price than what he pays daily. He cannot remain without consumption of such goods. It shows consumer gets more satisfaction than what he pays in normal times. It means he gets surplus satisfaction. It is over and above that he makes the payment for it. Because any rational consumer will pay the maximum price for any commodity which is exactly equal to the satisfaction derived from that commodity. Generally try to pay the price any commodity which is less than the satisfaction derived from it. He rarely pays the price which is greater than the satisfaction derived from it.

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After reading this chapter, you are expected to learn about:

Significance of the concept of demand

Law of Demand


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