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Review
ConsumerSurplusandProducerSurplus
Most countries have a market economy. In voluntary transactions in a market economy, consumers gain consumer
surplus. Consumer surplus can be calculated as maximum utility minus cost. Let’s take bus fare as an example.
The person who rides the bus pays a fare in exchange for the utility of getting to the destination. The utility that the
passengercanobtainissetatthemaximumfarethepassengeriswillingtopay.Ifthemaximumfaretheyarewilling
topayisUS$2andtherealbusfareisUS$0.90,thepassengergetsaconsumersurplusofUS$1.10whileridingthebus.
IfthebasicbusfarerisestoUS$1.05,theconsumersurplusdecreasesbyUS$0.15,butthereisstillaconsumersurplus
ofUS$0.95,sotheytakethebus.Ofcourse,producersalsoparticipateinthetransaction,soproducersgainproducer
surplusjustasconsumersgainconsumersurplus.Producersurplusistheamountofmoneyaproduceractuallyearns
minus the minimum amount of which he thinks he should earn. Thus, in every transaction, the consumer and the
producereachgainasurplus.Therefore,theeconomicprincipleof“allpartiesvoluntarilyparticipatinginatransaction
willbenefit”isestablished.
Conversely, in the movie, scarce time is traded, but the price of time is not determined by the market. Instead, it is
determinedbysomewealthypeoplecalledthe“system.”Itissimilartoaplannedeconomysysteminwhichthestate
sets prices. The system exploits consumer surplus by raising prices. Still, reluctantly, consumers pay. The tolls are
sohighthatthepoorcannotevenentertherichdistricts.Inthisway,thesystemcontrolstheeconomy.Thesocietyis
inaconditionwherethegapbetweentherichandthepoorinownershipoftime,whichisanasset,isextreme.Thus,
itleadstothesituationwhereonlythesystembenefitsandconsumersdonot.
Watching the movie “In Time,” Benjamin Franklin’s saying
“time is money” naturally comes to mind. The main character,
Will, lives a life that is significantly different from the real
life, but when looking at the economic situation that occurs
in “In Time,” it also resembles our reality to some extent. A
disorganized flow of economic principles can be found in
a planned economic system of the society in the movie by
oppressing people through price fluctuations and inflation, led
ⓒ
Forbes
by fears of scarcity of resources. As a consequence, people
outside the system suffer from no guarantee of a consumer
surplus.Intherealworld,societynowexistsinanunstablepriceflowinthepostCOVID-19era.Fortunately,
most countries are market economies, so there is no need to actively change the economy by robbing banks
likeWill.However,eveniflong-termforecastingisdifficultbygraspingtheseeconomictrends,itwillbean
important item on the agenda for the national economy as well as for individuals to make short-term future
economicforecasts.
trulymonica1224@hufs.ac.kr
40
www.theargus.org
ConsumerSurplusandProducerSurplus
Most countries have a market economy. In voluntary transactions in a market economy, consumers gain consumer
surplus. Consumer surplus can be calculated as maximum utility minus cost. Let’s take bus fare as an example.
The person who rides the bus pays a fare in exchange for the utility of getting to the destination. The utility that the
passengercanobtainissetatthemaximumfarethepassengeriswillingtopay.Ifthemaximumfaretheyarewilling
topayisUS$2andtherealbusfareisUS$0.90,thepassengergetsaconsumersurplusofUS$1.10whileridingthebus.
IfthebasicbusfarerisestoUS$1.05,theconsumersurplusdecreasesbyUS$0.15,butthereisstillaconsumersurplus
ofUS$0.95,sotheytakethebus.Ofcourse,producersalsoparticipateinthetransaction,soproducersgainproducer
surplusjustasconsumersgainconsumersurplus.Producersurplusistheamountofmoneyaproduceractuallyearns
minus the minimum amount of which he thinks he should earn. Thus, in every transaction, the consumer and the
producereachgainasurplus.Therefore,theeconomicprincipleof“allpartiesvoluntarilyparticipatinginatransaction
willbenefit”isestablished.
Conversely, in the movie, scarce time is traded, but the price of time is not determined by the market. Instead, it is
determinedbysomewealthypeoplecalledthe“system.”Itissimilartoaplannedeconomysysteminwhichthestate
sets prices. The system exploits consumer surplus by raising prices. Still, reluctantly, consumers pay. The tolls are
sohighthatthepoorcannotevenentertherichdistricts.Inthisway,thesystemcontrolstheeconomy.Thesocietyis
inaconditionwherethegapbetweentherichandthepoorinownershipoftime,whichisanasset,isextreme.Thus,
itleadstothesituationwhereonlythesystembenefitsandconsumersdonot.
Watching the movie “In Time,” Benjamin Franklin’s saying
“time is money” naturally comes to mind. The main character,
Will, lives a life that is significantly different from the real
life, but when looking at the economic situation that occurs
in “In Time,” it also resembles our reality to some extent. A
disorganized flow of economic principles can be found in
a planned economic system of the society in the movie by
oppressing people through price fluctuations and inflation, led
ⓒ
Forbes
by fears of scarcity of resources. As a consequence, people
outside the system suffer from no guarantee of a consumer
surplus.Intherealworld,societynowexistsinanunstablepriceflowinthepostCOVID-19era.Fortunately,
most countries are market economies, so there is no need to actively change the economy by robbing banks
likeWill.However,eveniflong-termforecastingisdifficultbygraspingtheseeconomictrends,itwillbean
important item on the agenda for the national economy as well as for individuals to make short-term future
economicforecasts.
trulymonica1224@hufs.ac.kr
40
www.theargus.org
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