A consumer may be described as an individual who is the end user of finished product or services. Consumer may be a person or any company. Anyone who utilizes the products is the consumer. Consumer performs a essential part in the overall economy and even society. Consumer produces requirement and whenever demand comes up, intensity to produce the products arises. People consume products and services for the fulfillment of their requirements. To fulfill the requirement, consumer make choices since each and every requirement can't be fulfilled. In some cases the demand for the product surpasses the production and that scenario is referred to as scarcity. Although alternatively, when the production exceeds the demand that scenario is referred to as surplus.
Consumer Equilibrium:- Earnings of the consumer and cost of the products are two key elements in deciding the consumers requirement and his strength to spend on product or service. Consumer equilibrium is the circumstance when consumer will consume quantity of products and services based on his earnings and cost of products. There are varieties of consumers. Few of the nature that they are extremely price subtle but few are not sensitive to price changes. This sensitivity of price is also called price elasticity of demand. Connection of price of the product with demand of the product is referred to as price elasticity of demand. Consumers with high income group or perhaps which are in immediate need of the product will be completely ready to spend no matter what the cost of the product reaches. Alternatively there are consumers who are usually looking for low priced goods.
Consumer Surplus:- Consumer surplus is thought to have happened whenever the market price of the product is below what the consumer is ready to spend. This means that, sometimes consumer is ready to pay more price than the price prevailing in the market. In this scenario, consumer surplus arises. Producer surplus arises when price they basically receive is higher than the value at which they are willing to sell their product or service. Consumer is ready to pay the cost more than the cost prevailing in the market in many cases like, when the consumer is in immediate need of the product or service or when goods are luxurious.