Consumer Surplus Calculator
From the maximum willingness-to-pay, market price and quantity, estimate consumer surplus under a linear-demand approximation.
Input Data
Results
At a glance:Consumer surplus is the sum of the gap between what consumers are willing to pay and what they actually pay — the net benefit from trade. Under a linear-demand approximation: CS = ½ x (max willingness-to-pay - market price) x quantity. Example: intercept 100, price 60, qty 500 → CS = ½ x 40 x 500 = HK$10,000. WARNING: Linear triangle approximation; max WTP is the demand intercept, not an individual bid; real demand may be non-linear (use integration); if price ≥ intercept, CS = 0. Education, not advice.
Formula
Consumer surplus = ½ × (maximum willingness-to-pay − market price) × quantity.
$$CS = \tfrac{1}{2} \times (P_{max} - P_{market}) \times Q$$How to Use
- Enter the demand curve's maximum willingness-to-pay (intercept).
- Enter the actual market price and quantity.
- View the approximate consumer surplus.
FAQ
What does consumer surplus represent?
It is the sum of the gap between what consumers are willing to pay and what they actually pay — the extra value they get from trade. If you would pay HK$100 but only pay HK$60, you 'gain' HK$40 of satisfaction; summing all such gaps is consumer surplus, a key measure of consumer welfare and market efficiency.
Why is there a ½ in the formula?
Under a linear demand curve, consumer surplus is the triangle between the demand curve and the price line. Triangle area = ½ x base x height, where base = quantity and height = (max WTP - price). For non-linear demand, integrate the area under the curve.
How does a price rise affect consumer surplus?
A higher price shrinks (max WTP - price) and usually also quantity, so consumer surplus falls — which is why taxes and price controls are analysed for their welfare impact. Lower prices enlarge it. Policy analysis compares the change in consumer (and producer) surplus.
How is it related to producer surplus and total surplus?
Consumer surplus (below price, above demand) plus producer surplus (above supply, below price) equals total surplus (social welfare). In an undistorted competitive market, total surplus is maximised; taxes, price caps, monopolies or subsidies cause a deadweight loss — the surplus that disappears. See the deadweight-loss calculator.
Why the ½ again?
The ½ comes from the geometry: linear demand makes the surplus a right triangle (area = ½ x base x height). Here base = quantity Q and height = (P_max - P_market), giving CS = ½ x (P_max - P_market) x Q. This is a linear simplification; real demand curves may be curved, in which case the area is an integral, not exactly a triangle. Still, the ½ formula conveys the concept and magnitude well for teaching and estimates.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.