Economics: what is Supply and Demand?

Economics:  What does the area under the supply and demand curve  represent?

• I know it's supposed to represent Consumer and Producer surplus. What doesn't make sense to me, is that if we calculate both producer surplus and consumer surplus areas, that they have the same area. If the price at consumer surplus is higher, how can this be?

• Answer:

  Consumer surplus is the area below the demand curve and above the price. The reason is that this is the difference between what people value the good and what the good actually costs. If a product costs $5, and a consumer values it at $10, their consumer surplus is $10-$5 = $5. If a product costs $5, and one person values it at $10, one at $9, one at $8, one at $7, and one at $6, the total consumer surplus is $5+$4+$3+$2+$1. This sum is the area under the demand curve and above the price. (People who value the good at less than $5 don't buy it, and so don't receive consumer surplus. The area under the total demand curve is what the consumer surplus would have been if price was $0.) Producer surplus is the area above the supply curve and below the price. The reason is that this is the difference between how much producers make and how much producers would have been willing to sell the good for. If a good costs $5 and one producer would have been willing to sell it for $0, one at $1, one at $2, one at $3, and one at $4, the total producer surplus is $5+$4+$3+$2+$1. (In competitive markets, the area under the total supply curve would be the total cost of producing an infinite amount of goods.) They don't necessarily have the same area: