EC120 Lecture 7: Consumers, Producers, and the Efficiency of Markets – Chapter 7
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
Consumers, producers, and the efficiency of markets chapter 7. Study of how the allocation of resources affects economic well-being. Looks at benefits buyers and sellers receive from participating in a. Finding point where both buyers and sellers" benefits are maximized market. What a consumer is willing to pay minus what they actually pay. Maximum amount that a buyer is willing to pay for a good. Demand curve reflects buyers" willingness to pay. Area below the demand curve and above the price measures consumer surplus in a market consumer surplus. Difference between willingness to pay and market price is each buyer"s. Total area below demand curve and above price is sum of consumer surplus of all buyers in market. Lower price consumer surplus goes up. Cost: value of everything a seller must give up to produce a good (i. e. producer surplus: amount a seller is paid for a good minus the opportunity cost) seller"s cost.
