Sublime

Consumer surplus Consumer surplus is the consumer’s gain from exchange, or the difference between the maximum price a consumer is willing to pay for a certain quantity and the market price.

Sellers will, therefore, decide to increase their prices for one of two reasons: (1) their own costs have increased and they can no longer make the desired profit or return otherwise, or (2) customers start to buy faster, such that inventory is depleted before it can be replaced, suggesting that more potential customers exist than can be serviced

The fact that oil is not equally valuable in all of its uses explains why the demand curve for oil has a negative slope. When the price of oil is high, consumers will choose to use oil only in its most valuable uses (e.g., gasoline and jet fuel). As the price of oil falls, consumers will choose to also use oil in its less and less valued uses

answers. First, the high prices create an opportunity for price differentiation . Not all buyers receive the same discount. One role of the seller is to offer the smallest possible discount without losing the customer.