What does it mean when consumer surplus = producer surplus?

Question

In one of my econ questions, I got the same $ for consumer surplus and producer surplus.

What does this indicate? Does it mean that both producers and consumers are happy with what they paid (consumers)/what they determined as the product price (producers)?

Answer 1

It's neither bad or good, just a coincidence. CS is the area under demand but above price and PS is the area above supply but below price. It's perfectly ok for both of those calculations to be equal.

Answer 2

It means the exchange was equally beneficial to the consumer and the producer sides of the market. The CS and PS triangles created have the same area.

With straight-line D and S curves, the CS and PS areas are calculated as =1/2(base*height).

CS is defined as the difference between the MAXimum price the consumer is able and willing to pay (found ON the D-curve) minus the price the consumer had to pay (market (or equilibrium) price). So it is the area under the D-curve, but above the line created by extending the equilibrium price back toward the vertical (price) axis. it is the "win" a consumer feels from being able to purchase the good/service paying less than their maximum acceptable price.

Likewise, but reversed, PS is the difference between the MINimum acceptable price the producer is able and willing to accept (found ON the S-curve), and the price they actually get to charge (market (or equilibrium) price. It is the area above the S-curve, but below the line created by the equilibrium price. It is the "win" the producer feels from being able to sell/charge at a price above their minimum acceptable price (based on their costs of production).

Total Surplus = CS+PS, and is maximized when a competitive market reaches equilibrium.

Hope this helps!