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Week 4 Notes

by: Paige Holub

Week 4 Notes ECON 2022

Paige Holub

GPA 3.731

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About this Document

Hello everyone. This is the fourth installment of my notes, which include photographs this time! This lesson covers what was discussed in class on 2/15 and 2/17. Please let me know if you have a...
Principles of Microeconomics
Brian Duncan
Class Notes
Economics, Micro-economics, micro, Problem Set
25 ?




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This 6 page Class Notes was uploaded by Paige Holub on Wednesday February 17, 2016. The Class Notes belongs to ECON 2022 at University of Colorado Denver taught by Brian Duncan in Winter 2016. Since its upload, it has received 45 views. For similar materials see Principles of Microeconomics in Economcs at University of Colorado Denver.

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Date Created: 02/17/16
Paige DeWitt-Holub 02/15/16 “Lecture #6 I. Consumer and producer surplus II. Government Policy A. Price Ceiling B. Price Floor” Question 1 Problem set 3 Elasticity between 2 points Difference between producer surplus and profit, increase means a profit, decrease means a loss A. “Producer surplus The difference between the price seller receive for each unit (i.e. governmental taxes) and the lowest price sellers would be without to sell each unit for” – -demand curve – every unit sold at 12, what was the seller and buying thinking about the initial price, initially seller could have sold at 9 and got to sell it at 12 for a profit to them only continuous goods are more difficult to measure than just 1 -add up all the units of how much you actually sold – Producer Surplus is the area of that triangle (1/2bh) PS = ◣ = 1/2bh = 12(4)(4) = 8 “B. Consumer surplus: The difference between price buyers are willing to pay for each unit of a good and the price they actually pay” Consumer surplus = ◣ = 1/2bh = ½ (4)(2) = 6 Price correlates to consumer worth, something with a higher price that is being actively purchased is valued more Water is super important and trumps other items – “diamond water paradox” -> water = quantity high, price low/ diamonds the exact opposite -if water gets too expensive consumers are worse off -value of the last consumer (who bought the diamonds, etc.) is the marginal person but they also set the price -“price is the value to consumers of the last unit sold” “total amount being spend on the good is not the total value.” 1 A. “Price Ceiling – a law that makes it illegal to charge more than a certain price” ex. Lease agreements, food through third world country initiatives, price has to be below the equilibrium price so the price is binding - P.C. price control 1 All works in quotations are taken from the board of Professor Duncan. 1,200 the highest price for 1, consumer surplus is everything above the price and below the surplus, so a small triangle will tell the consumer surplus before the triangle “Before C.S. = a+b+c- ½(12)(1200) = 7,200 P.S. = d+c+f- ½ (12)(720) = 4320 T.S. = C.S. + P.S> = 11.520 After C.S. a (b+d) = 1/2 (10)(1000)= (10)(320) *P.S. f = ½ (10)(600) = 3,000 – lower the profits of the landlords, lost d+c and now it went to consumers T.S. 11,200“ – dead weight, loss of 320 B. “Price Floor – a law that makes it illegal to charge less than a certain price”


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