Graphically Consumer surplus, is the amount of surplus above the equilibrium price. The producer surplus is the amount of surplus that is below the equilibrium. In other words the consumer surplus is the amount that consumers benefit from a price being lower then they would be willing to pay. Then for producer surplus it is the amount that the producers benefit from being able to sell the product for more than they were willing to sell it for.
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n a monopoly producers raise the price in order to gain extra producer surplus that they would normally not get, at an equilibrium price and quantity. Therefore the monopoly steals some of the consumer surplus by raising the price higher than the equilibrium price. This is why no one likes monopolies!!!

external image BadMonopoly.GIF



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A monopoly can change the consumer AND producer surplus'?
A) True
B) False

answer= true