On a standard supply and demand diagram these are the areas in the triangles below:
The consumer surplus shows up above the price and below the demand curve, since the consumer is paying less for the item than the maximum that they would pay. The producer surplus shows up below the price and above the supply curve, since that is the minimum that a producer can produce that quantity with.
Combined, they make the total surplus.
A basic technique of bargaining for both parties is to pretend that one's surplus is less than it really is: the seller may argue that the price he or she asks hardly leaves him or her any profit, while the customer may play down how eager he or she is to have the article.
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