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## Econ 142 Chapter 4 notes: consumer surplus

by: Moriah Gerber

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# Econ 142 Chapter 4 notes: consumer surplus ECON 142

Marketplace > Kansas > Micro Economics > ECON 142 > Econ 142 Chapter 4 notes consumer surplus
Moriah Gerber
KU
GPA 3.5

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these notes cover the consumer surplus equations, and what happens to the supply and demand curves when you add a tax.
COURSE
Microeconomics
PROF.
Dr. Brian Staihr
TYPE
Class Notes
PAGES
2
WORDS
KARMA
25 ?

## Popular in Micro Economics

This 2 page Class Notes was uploaded by Moriah Gerber on Thursday September 8, 2016. The Class Notes belongs to ECON 142 at Kansas taught by Dr. Brian Staihr in Fall 2016. Since its upload, it has received 23 views. For similar materials see Microeconomics in Micro Economics at Kansas.

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Date Created: 09/08/16
Wednesday, August 31, 2016 Chapter 4 Consumer Surplus - P=a-b*Q - Consumer surplus: the difference between the price you have to pay and the price you’d be willing to pay - area of a triangle: (1/2) base * height - whats the value of consumer surplus? the triangle - shifting either curve- or both curves- can affect the value of consumer surplus - if consumer surplus increases, consumers (as a whole) are better off - if consumers surplus decreases, consumers (as a whole) are worse off Producer Surplus - difference between lowest price a ﬁrm would accept and the price is actually receives - these two combined represent economic surplus - deadweight loss: deadweight loss is the reduction in economic surplus that results when the market isn't efﬁcient Applying a Tax - applying a tax you shift the supply curve up by the tax amount - when that happens consumer surplus is reduced - the harm (or cost) to consumer surplus is measured by the loss in consumer surplus Using Supply and Demand - in most markets, supply and demand set the prices - but sometimes the government steps in the affects pricing 1 Wednesday, August 31, 2016 Price Ceiling - a price ceiling is where the price cannot exceed a certain point - you should group price ceiling and shortage together! - a price ceiling above the equilibrium price does nothing to distort the market - Real world examples: • rent controlled apartment • gas prices • in Venezuela they have a price ceiling on basic items (like chicken) which causes a shortage of these items Price Floor - a price ﬂoor is a price level you cannot go below - you should group price ﬂoor and shortage together! - a price ﬂoor below the equilibrium price does nothing to distort the market 2

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