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econ 102 notes 3-16-09

econ 102 notes 3-16-09 - Market power – the ability to...

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Willingness to pay - the maximum amount that a buyer will pay for a good. Consumer surplus - the amount that a buyer is willing to pay for a good minus the amount the buyer actually pays for it It is the area below the demand curve and above the price Producer surplus - the amount that a seller is paid for a good minus the seller’s cost of providing it
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Unformatted text preview: Market power – the ability to influence prices Externalities - cause welfare in a market to depend on more than just the value to the buyers and cost to sellers example: using pesiticides market power and externalities are examples of market failure...
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