EC 111 Chapter Notes - Chapter 4: Deadweight Loss, Price Floor, Economic Surplus
Document Summary
Demand curve can also be referred to as a marginal benefits curve. The price that people are willing to pay compared to the actual price they paid is the consumer surplus. Consumer surplus the difference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer pays. Ex: if michelle is willing to pay if for a cup of coffee and pays , her consumer surplus is . Marginal buyer someone who"s willing to pay the same amount of money as a product is charged. Ex: if mark is willing to pay for a cup of coffee and the cost is . Producer surplus the lowest price the producer is willing to sell a product for and the price they receive for it. Supply curve can also be referred to as the marginal cost curve. Marginal seller the seller that derives no producer surplus.
