Class Notes 9/24 Consumer Surplus: difference between what you would I have been willing to pay vs. What you got to pay Lex: finding out something you would've bought anyway
was on sale
margnal M. Be benefit
blue: total cost stue
shaded area (whole):
Orange .consumer surplus
Ly area above the price line and below the demand are * You get Z eRo consumer surplus for the last unit
We also discuss several other topics like What refers to pragmatic utility of an object?
you buy Le you're reached equilibrium price
•continue to consume until surplus is o- will consume as long Las consumer surplus is positive
) Study Soup
Producer Surplus : difference between what a firm would be If you want to learn more check out What are the elements of san germiniano?
Willing to sell a good for & what it gets to sell a good for J
s, Marginal cost of producing
I cost -
-Q/time Ovange producer surplus : avea blue i consumer surplus
(above) parte da price & supply curve
Producer surplus + consumer surplus - Total economic surplus ! Greatest ecasamic surplus occurs when : pas s e s
u o marginal cost = marginal benefits If you want to learn more check out What are yarns for?
• quantity demanded-quantity supplied
• When demand decreases, both consumer & producer surplus decrease
• Producer suplus usually an earlier units - due to law of
increasing opportunity cost (costs more as you go)
•consumer surplus is bigger If demand care is steeper!
reservation price for first few is soup very high
& supply are Does NOT affect consumer surplus
x producer - profit
I surplus p
floory If you want to learn more check out What is the term for the chemical activities of cell?
a Price floor: Minimum price
ex minimum wage Quanty traded is determined by a ble smaller)
Q Qt as
) Study Soup
trades people would've wanted to engage but are NOT allowed
4 important concepts from today:
1) restrictions in the market lead to a loss of economic Don't forget about the age old question of What is computed in unit-elastic demand?
surplus (deadweight loss). 2 consumer surplus is when you get to pay less 3) producer surplus is when they get to sell for more
4 surpluses are LARGer whers supply & demand If you want to learn more check out Whose idea is antithesis?
curves are Steeper
3* Price floor is ABOVE equilibaum, price ceiling BELOW*
) Study Soup
of emergency- prices became frozen
In State of emergenc.
gereatrs, gas, ice, etc from
Producer surplus is smaller when suppler cane is flatter
Deadweight loss a loss of economic surplus due to some
type of economic restriction in the
market Hexi & price restriction
not enough competition apolental was there - now gone
on due to infairness
Restrictions: Price floor: minimum (regally mandated price
something can be traded Price ceilina legally mandated maximum
I something can be tradeda
xamount traded in market
Will be smaller of Qs or
al Qs in this case)
Qs Qui Qin altame