Micro Foundations · intro
What moves on the Consumer & Producer Surplus diagram
Supply-side improvements expand output and pass much of the gain to consumers as lower prices.
Start at equilibriumequilibriumThe point where opposing forces balance, quantity supplied equals quantity demanded, so there's no pressure for price to change..
Technology cuts production costs, supply shifts right, price falls.
Total surplus grows, and notice WHO gains most: cheaper supply hands consumers a bigger slice.
Examiners ask this as: costs fall surplus, technology surplus, consumer gains from supply.
Other scenarios on Consumer & Producer Surplus