Chapter 6

Chapter 6 - trading in the market. It is the sum of the...

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Chapter 6 Slide 4 o It is equal to the difference between the buyer’s willingness to pay and the price paid o Is the sum of the individual consumer surpluses of all the buyers of a good Slide 11 o Measures the benefit that buyers receive from a good as the buyers themselves perceive it. Slide 12 o Producer surplus is the amount a seller is paid for a good minus the seller’s cost. o It measures the benefit to sellers participating in a market. Slide 17 o The area below the price and above the supply curve measures the producer surplus in a market Slide 19 o Total surplus in a market is the total net gain to consumers and producers from
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Unformatted text preview: trading in the market. It is the sum of the producer and the consumer surplus o TS=CS+PS Slide 22 o Both the consumer and producers are better off because there is a market in this good (Gains from trade) o Free markets properly allocate goods to buyers and sales to sellers o Total surplus is maximized Slide 23 o Market Failure: Occurs when a market fails to be efficient Slide24 o A tax causes a deadweight loss to society, because of the good is produced and consumed than in the absence of the tax. As a result, some mutually beneficial trades between producers and consumers do not take place....
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Chapter 6 - trading in the market. It is the sum of the...

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