ECON 20A Lecture Notes - Lecture 4: Economic Surplus, Demand Curve, Market Research
Document Summary
Measuring well-being of buyers and sellers while interacting in the market. Study of how the allocation of resources affects economic well-being. Willingness to pay - maximum amount that a buyer will pay for a good, how much he values the good. Cs measures the benefit buyers receive from participating in a market. With bidding jeff buys the headphones at slightly > : the person valuing the headphones most gets them. Jeff"s consumer surplus is - = . Cs = (amt buyer is willing to pay) - (amt buyer actually paid for a good) Two sets of headphones - sold at same price. Now jeff and jake both buy them at slightly > . Market cs = (add up everyone"s surplus") Cs is the area below the step demand curve and above the price. As buyers increase, the step demand curve would become more and more a straight line.
