Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public PolicyClark, John Bates
General
Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy
Clark, John Bates
Economics
_The Consumers' Surplus._--In every such case there are men who would
give much more for the article rather than be without it, and we have
supposed that some one would pay a hundred dollars for this commodity
if he could not otherwise obtain it. Ninety dollars, then, measures
what we may call his _consumers' surplus_, or the clear benefit he
gets from buying at its market price an article that is worth to him
so much more. This comes about by the fact that the makers of article
A, in order to sell the amount of goods that competition has impelled
them to make, must accept the offers of persons who can consistently
give only ten dollars for it. These are relatively poor persons, and
as the sum of ten dollars expended on other articles would benefit
them as much as ten dollars spent on this one, it is a "final"
purchase, or a final increment of their consumers' wealth. In order to
get it they sacrifice, in some other form, a benefit as great as the
one they get from acquiring this commodity and receive, therefore, no
consumers' surplus from it. These are the men whose demand helps to
fix the price of the article A, and the willingness of other persons
to give more does not make it bring any more. The rich men, who stand
ready to pay a hundred dollars, if necessary, are gainers by letting
poorer men fix this price. It is by catching the patronage of these
poorer men that the makers can dispose of their large output, and in
doing this they have to bring the price down to ten dollars.
Public-domain text, read in full here on John Shaqi.
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