Log in
HomeClass Notes1,200,000US530,000

ECON 200 Lecture Notes - Lecture 8: Demand Curve, Economic Surplus

55 views2 pages
orangecamel475
20 Dec 2016
School
UW
Department
Economics
Course
ECON 200
Professor
Ken Ho

For unlimited access to Class Notes, a Class+ subscription is required.

oliveherring648 and 21 others unlocked
ECON 200 Full Course Notes
22
ECON 200 Full Course Notes
Verified Note
22 documents

Document Summary

Studies how the allocation of resources affect individuals and economic well-being. A buyer"s willingness to pay is the max amount the buyer will pay for the good: measures how much the buyer values the good. The marginal buyers are the ones who would leave the market if p were any higher than a certain price. Consumer surplus is the amount a buyer is willing to pay minus the amount the buyer actually pays. Total consumer surplus is the area under the demand curve above the price from 0 to q. In most markets, consumer surplus reflects economic well-being. Fall in consumer surplus due to buyers leaving market and remaining buyers paying for higher price. The value of everything a seller must give up to produce a good. Includes cost of all resources used to produce good, including value of the seller"s time.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

ECON 200 Lecture Notes - Lecture 18: Economic Surplus, Demand Curve
erinsea-lion256
ECON 200 Lecture Notes - Lecture 19: Market Failure, Economic Surplus, Step Function
erinsea-lion256
ECON 200 Lecture Notes - Lecture 11: Opportunity Cost, Market Power, Economic Surplus
orangecamel475

Related Questions

Efficiency in a market is achieved when

a. social planner intervenes and sets the quantity of output after evaluating buyers willingness to pay and sellers' costs

b. the sum of producer surplus and consumer surplus is maximized

c. all firms are producing the good at the same low cost per unit.

d. no buyer is willing to pay more than the equilibrium price for any unit of the good.

True or False:

1. Consumer surplus is the buyer's willingness-to-pay minus the seller's opportunity cost of production.

2. If your willingness-to-pay for a hamburger is $3 and you paid $2, then your consumer surplus is $5.00

3. The opportunity cost of production for a seller includes the implicit cost of the seller's time.

4. The height of the supply curve at a selected quantity is the seller's opportunity cost of producing that marginal unit.

5. Total surplus (total well-being) is the seller's cost of production minus the buyer's willingness-to-pay.

6. The competitive market equilibrium outcome is efficient because it allocates the produced output to the buyers who place the highest value on the good

7. Producer surplus is the area above the supply curve and below the price.

8. The competitive market equilibrium outcome maximizes total surplus (total well-being)

9. Producing and consuming more of a good will always increase the total surplus(total well-being).

7) Indicate whether each of the following statements is true or false, and explain why.

A. Producer surplus tends to fall as the supply curve becomes more elastic.

B. Consumer surplus tends to rise as demand becomes more elastic.

C. The market demand curve indicates the minimum price buyers are willing to pay at each level of production.

D. The market supply curve indicates the minimum price required by sellers as a group to bring forth production.

E. Consumer surplus is the amount that consumers are willing to pay for a given good or service above and beyond the amount actually paid.