CHAPTER 7CONSUMERS, PRODUCERS, AND THE EFFICIENCY OF MARKETS145equals the total area of the two rectangles: John’s consumer surplus at this price is$30 and Paul’s is $10. This area equals a total of $40. Once again, this amount is theconsumer surplus we computed earlier.The lesson from this example holds for all demand curves: The area below thedemand curve and above the price measures the consumer surplus in a market.The reasonis that the height of the demand curve measures the value buyers place on thegood, as measured by their willingness to pay for it. The difference between thiswillingness to pay and the market price is each buyer’s consumer surplus. Thus,
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