To use this simulation, you must download and install the Mathematica Viewer. Although this software is free, it is a sizable download. This activity is therefore optional.
Surplus is a measure of the willingness of a producer or a consumer to participate in the marketplace. Total surplus is the sum of producer surplus and consumer surplus. The relative amounts of total surplus claimed by the consumer or the producer is determined by their respective elasticities of demand and supply. The following simulation shows how elasticities determine the sharing and magnitude of total surplus, consumer surplus, and producer surplus
Once you have downloaded the software to your desktop, open the simulation and read the instructions.
Change the respective elasticities by moving each slider. Note how the area of the blue triangle (consumer surplus) and the pink triangle (producer surplus) change proportionally to changes in the respective elasticities. Three positions for the sliders are of particular interest.
Record your observations in your notes and discuss your conclusions with your peers in the discussion forum.