The concept of consumer surplus has been severely criticized ever since mar shall propound and developed it in his principles of economics. Critics have described it as quite imaginary unreal and useless. Most of the criticisms of the concept have been level edginess the Marshallian method of measuring it as an area under the demand curve. However some critics have challenged the valiabity of the concept itself. Marshallian concept of consumer surplus has also been criticized on the ground of its being based upon unrealistic and questionable assumptions. We explain below the various criticisms leveled against this concept and will critically appraise tem.

1. It has been pointed out by several economists that the concept of consumer surplus is quite hypothetical imaginary and illusory. They say that a consumer cannot afford to pay for a commodity mroethan his income. The maximum amount which person can pay for a commodity or for a number of commodities is limited by the amount of his money income. And as is well –known a consumer wants a number of good on which he has to spend his money Total sum of money actually spent by him on the goods cannot be greater than his total money income. Thus what a person can be prepared to pay for a number of good he purchase cannot be greater than the amount of this money income. Viewed in this light there can be no question of consumer getting any consumer surplus for his total purchases of the goods.

But in our view the above criticism misses the real point involved in the concept of consumer surplus. The essence of the concept of consume surplus is the tonsure gets excess spaying satisfaction form his purchases of the goods. It is true that with his limited money income consumer cannot pay more than is total money income for his total purchases than that he actually pays. But nothing prevents him from felling and thinking that he derives more satisfaction form the goods than the priceheactually pays for them and if they had the means he would have paid much more for the goods than they actually pays for them.

2. Another criticism against consumer surplus is that it is based upon the invalid assumption that different units of the good give different amount of satisfaction to the consumer. We aver explained above how marshal calculated consumer surplus derived by the consumer form a good consumer purchases the amount of a good at which marginal utility is equal to its price. It is assumed that marginal utility of a good diminishes as the consumer has more units of it. This means that while at the margin of the purchase marginal utility of the good is equal to its price tor the previous intra-marginal unit’s marginal utility is higher than the price and on these intra marginal units a consumer obtains consumer surplus. Now the critics point out that when a consumer takes more unties fo commodity it is not only the utility of the marginal unit that declines but also all previous nits of the commodity he has taken. Thus as all units of commodity are assumed alike all would have the same utility. Ad when at the margin price is equal to the marginal utility of the last unit purchased the price will also be equal to the utility of the previous unties and consumer would therefore not get any consumer surplus.

But this criticism in also not acceptable because even though all units of a commodity may be lake, they do not give same satisfaction to the consumer; as the consumer takes the firth units be derives more satisfaction from it and when he takes up the second unit, it does not give him as much satisfaction as the first one because while taking the second unit a part of his a want has already been a satisfied. Similarly when he takes the third unit it will not give him as much satisfaction as the previous two units, because now a part of his want has been satisfied. Similarly when he takes the third units, it will not give him as much satisfaction as the previous two units. If we accept the above criticism, we then deny the law of diminishing marginal utility. But diminishing marginal utility from a good describes the fundamental human tendency and has also been confirmed by observation of actual consumer behaviour. The concept of consumer surplus is derived from the law of diminishing marginal utility. If law of diminishing marginal utility is valid the validity of the marshcallia concept of consumer surplus cannot be challenged.

3. The concept of consumer surplus has also been criticized on the goring that it ignores the interdependence between the good that is the relations of substitute and complementary goods. Thus it is pointed out that if only tea were variables and no other substitute drinks such as milk coffee etc were tree then the consumer would have been prepared to pay much more price of tea tan that in the presence of substitute deinks. Thus the magnitude of consumer surplus derived from commodity depends upon the avialiidty of substitutes. This is because if only tea were available consumer will have no choice and would de be afraid that if the does not get tea, he cannot satisfy his given want by consuming any other commodity. Therefore he will be willing to pay more for a cup of tea rather than go without it. But if substitutes of tea are advisable he would not be prepared ot pay as much price since he will think that if he is deprived of tea, he will take other substitute drinks like milk and coffee. Thus it is said that consumer surplus is not a definite precise and unambiguous concepts; it depend upon the availability of substitutes. The degree of substitutability between different goods is different of different consumers and this makes the concept of consumer surplus a little vague and ambiguous. Marshall was aware of this difficulty and to overcome this he suggested that for the purpose of measuring consumer surplus substitute products like tea and coffee be clubbed together and considered as one single commodity.

4. Prof Nicholson described the concept of consumer surpluses hypothetical and imaginary he wits of what avail is it to say that the utility of an income of (say) a year is worth say a year according to profit. Nicholson and do the critics, it is difficult to say how much price a consumer would be willing to pay for a good rather than go without it. This is because consumer does not face this question in the market when he buys good he has to pay and accept the price that prevails in the market. Itisvery difficult of him to say how much he would be prepared to pay rather than go without it. However in our view this criticism only indicates that it is difficult to mea use consumer surplus precisely. That a consumer gets extra satisfaction form a good than the price he pays for it is ndenciabl.

5. The concept of consumer surplus has also been criticized on the ground that I am based weapon questionable assumption of cardinal measurability of utility and constancy of the marginal utility of money. Critics point out that utility is a psychic entity and cannot be measured in quantities cardinal terms. In view of this they point out that consumer surplus cannot be measured by the area under the demand curve as marshal did it. This is because Marshallian demand curve is based on the marginal utility curve in drawing which it is assumed that utility is cardinally measurable.

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