Demand (D)
Marginal Cost (MC)
Consumer Surplus (CS)
Producer Surplus (PS)
Understanding the Graph
Perfect Competition: The market reaches equilibrium where the demand curve intersects the marginal cost curve (P = MC). The green shaded area is consumer surplus (value buyers gain above what they pay). The yellow shaded area is producer surplus (revenue sellers receive above their cost). There is no deadweight loss — total surplus is at its maximum.