EconNotes4 - CONSUMER SURPLUS AND PRODUCER SURPLUS3/22/2008...

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CONSUMER SURPLUS AND PRODUCER SURPLUS 22/03/2008 15:57:00 Price Ceiling     A legally determined maximum price that sellers may charge. Price Floor     A legally determined minimum price that sellers may receive. Consumer Surplus     Demand curves show the willingness of consumers to purchase at different  prices. MARGINAL BENEFIT o The additional benefit to a consumer from consuming one more unit of  a good or service. CONSUMER SURPLUS o The difference between the highest price a consumer is willing to pay  and the price the consumer actually pays. The total amount of consumer surplus in a market is equal to the area below  the demand curve and above the market price. Producer Surplus     Supply curves show the willingness of firms to supply a product at different  prices. MARGINAL COST o The additional cost to a firm of producing one more unit of a good or  service. PRODUCER SURPLUS o The difference between the lowest price a firm would have been willing  to accept and the price it actually receives.
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EconNotes4 - CONSUMER SURPLUS AND PRODUCER SURPLUS3/22/2008...

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