ECON 1B03 Lecture Notes - Lecture 5: Economic Surplus, Reservation Price, Economic Equilibrium

20 views2 pages

blackherring683

24 Feb 2018

School

Department

Course

Professor

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

Shanghaibalcony1234 and 37744 others unlocked

ECON 1B03 Full Course Notes

Verified Note

46 documents

Document Summary

Consumer surplus: every buyer in an economy is only willing to pay up to a certain amount for a good/service. They got bene t of which is the amount of money they didn"t have to pay because p is lower than what they"re willing to pay. Anyone who would have paid more than gets a bene t: willingness-to-pay - what they actually pay. How a price change a ects cs if price decreases to , cbgf is addition to cs for initial consumers. New cs = area of raef = 1/2*70*600 = ,000. A produce who was happy and willing to take now receives 50$. His bene t is the he gets above what he was willing to take. Any producer who receives more than what they were willing to take enjoys a bene t. Total producer surplus, ps, is the area under the selling price and above the supply curve.

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.

chocolateantelope690

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.

bronzeoyster264

_____ is the extra profit obtained by a producer when they receive a price for a good that is more than the minimum amount they were willing to accept.

a) Producer surplus.

b) Consumer surplus.

c) Total Surplus.

d) All of the above.

ECON 1B03 Lecture Notes - Lecture 5: Economic Surplus, Reservation Price, Economic Equilibrium

ECON 1B03 Full Course Notes

Document Summary

Get access

Related Documents

ECON 1B03 Lecture Notes - Lecture 4: Economic Surplus, Reservation Price, Demand Curve

ECON 1B03 Study Guide - Final Guide: Deadweight Loss, Economic Surplus, Reservation Price

ECON 1B03 Study Guide - Midterm Guide: Average Cost, Demand Curve, Price Ceiling

Related Questions