BSB113 Lecture Notes - Lecture 4: Economic Efficiency, Economic Surplus, Economic Equilibrium
Document Summary
Consumer"s willingness to purchase a product at various prices. Additional benefit to a consumer from consuming one more unit of a good or service. Difference between the highest price a consumer is willing to pay and the price the consumer is actually prepared to pay. Measures the net benefit (total benefit minus total price paid) to consumers from participating in a market. Willingness of firms to supply a product at different prices. Additional cost to a firm from producing one more unit of a good or service. Difference between the lowest price a firm would be willing to accept and the price it actually receives. Measures the net benefit (total benefit minus total cost of production) to producers from participating in market. Equilibrium in a competitive market results in economic efficient level of output. A market outcome in which the marginal benefit to consumers of the last unit consumed is equal to its marginal cost of production.
