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Unformatted text preview: • If you shift demand, you don’t know what happens to consumer surplus, but you do know what happens to producer surplus. • If you shift supply, you don’t know what happens to producer surplus, but you do know what happens to consumer surplus. • Total surplus = CS + PS. • TS is maximized in this market and is a measure of efficiency. o Assumes no market failure. • For labor, the demand curve is for consumers, but those are the firms. o The supply curve is increasing, so the wage will decrease. o But consumers are better off by BCD, because they’re gaining those areas. o The consumers are the firms. • IE: Shortage. •...
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This note was uploaded on 04/24/2009 for the course ECON 2105h taught by Professor Staff during the Spring '08 term at University of Georgia Athens.
- Spring '08
- Consumer Surplus