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Unformatted text preview: Raleigh P P Y-intercept $25 Reason we dont Consumer Surplus have to worry about A = 1/2 b h P $10 D D Q Q 500 Q Most markets are relativity large, involving numerous buyers and each buyer is likely to have a different willingness to pay, the area above the price and below the demand curve is an extremely good approximation of consumer surplus. P Consumer surplus at P1 Additional consumer surplus to buyers at P2 already in market at P1 P1 Consumer surplus to new buyers at P2 P2 D Q Wednesday, October 04, 2006 PRODUCER SURPLUS COST is the value of everything seller up to produce the good of service Think of this as opportunity cost Willingness to accept or willingness to sell is the minimum amount that a producer will accept as payment for a good or service as is equivalent to opportunity cost PRODUCER SURPLUS is the difference between the price a seller receives and his willingness to accept...
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