Before any tax the original demand curve D and the original supply curve S will meet at point E which is the equilibrium point. The corresponding price and the quantity obtained is the equilibrium price and equilibrium quantity respectively. See the graph given below:

The consumer and producer surplus is the shaded region mentioned in the graph above. We found consumer surplus by taking the area above the market price P* and below the demand curve D because it is the difference between the consumer's willingness to pay and the actual price paid.

Similarly, producer surplus is found out by marking the area below the equilibrium price P* and above the supply curve S because it is defined as the difference between the producer's willingness to receive a price and the actual price they get.

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