15 Monday, October 2, 2006

15 Monday, October 2, 2006 - CONSUMER SURPLUS – A...

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Monday, October 02, 2006 Microeconomics LABOR MARKET P S = Workers Surplus Surplus = unemployment $6.00 Price Floor W*0 ($4.00) D = Firms Q*0 Q Minimum wage has its greatest impact on market for unskilled workers, because equilibrium wages are lowest in these markets. Advocates of the minimum wage argue that other things being equal , the minimum helps the working poor Opponents claim the minimum wage is a source of unemployment and its not he best way to fight poverty
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Monday, October 02, 2006 CHAPTER 7 WELFARE ECONOMICS – study of how the allocation of resources affect economic well being
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Unformatted text preview: CONSUMER SURPLUS – A buyer’s willingness to pay minus the amount the buyer actually pays LAWN CARE Price P Per $25 Lawn $22 Dave $19 Phil $16 Sue $13 Shirley $10 Greg Price $10 $7 Jerry D 1 2 3 4 5 6 Q # of lawns cut • At a price of $10 per lawn, people are willing to pay to have there lawns cut But some would be willing to pay more = the existence of consumer surplus Customer Consumer Surplus Dave $12 Phil $9 Sue $6 Shirley $3 Craig $0 $30 = market consumer surplus...
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