slides2 - 1. Supply & demand applications „ Measuring...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Supply & demand applications Measuring impact of government policies Price controls Trade Taxes and subsidies
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2. Impact of Government Policies New concepts: Consumer surplus is the total benefit or value that consumers receive beyond what they pay for the good. Producer surplus is the total benefit or revenue that producers receive beyond what it cost to produce a good.
Background image of page 2
3. Consumer surplus example Nancy Nortel’s demand schedule for flights to Toronto: P Q 15 1 10 2 6 3 3 4 1 5
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4. Consumer surplus example Nancy Nortel’s demand schedule for flights to Toronto: P Q Value 15 1 15 10 2 6 3 3 4 1 5
Background image of page 4
5. Consumer surplus example Nancy Nortel’s demand schedule for flights to Toronto: P Q Value 15 1 15 10 2 25 6 3 3 4 1 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6. Consumer surplus example Nancy Nortel’s demand schedule for flights to Toronto: P Q Value 15 1 15 10 2 25 6 3 31 3 4 34 1 5 35
Background image of page 6
7. Consumer surplus example If P=10, then Q=2 P Q Value P*Q Consumer surplus 15 1 15 10 2 25 20 5 6 3 31 3 4 34 1 5 35
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8. Consumer surplus example Looking now at all prices: P Q Value P*Q Consumer surplus 15 1 15 15 0 10 2 25 20 5 6 3 31 18 13 3 4 34 12 22 1 5 35 5 30
Background image of page 8
9. Consumer surplus Definition: difference between maximum consumer is willing to pay and what consumer actually pays Graphically = area under demand curve but above market price Applications: pricing, government policy analysis, nonmarket evaluation
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
10. Producer surplus Definition: difference between amount received by producer and minimum amount necessary to get production at a given level Graphically = area between market price and above supply curve
Background image of page 10
11.Consumer & producer surplus Quantity 0 5 10 7 Price S D
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12.Consumer & producer surplus
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/01/2008 for the course ECG 507 taught by Professor Allen during the Fall '05 term at N.C. State.

Page1 / 39

slides2 - 1. Supply & demand applications „ Measuring...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online