midterm2

midterm2 - Chapter 6 What is producer surplus? The net gain...

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Chapter 6 What is producer surplus? The net gain to a seller from selling a good / the sum of the individual producer surpluses of all the sellers of a good What is consumer surplus? The net gain to an individual buyer from the purchase of a good / the sum of the individual consumer surpluses of all the buyers of a good Assume a market is in equilibrium. Identify producer and consumer surplus on a graph. Left of the intersection is surplus. Above the line is consumer surplus and below the line is producer surplus. Use the concepts of producer and consumer surplus to explain why the market equilibrium is efficient. ? What does efficient mean? once the market has produced its gains from trade, there is usually no way to make anyone better off without making someone else worse off An excise tax is imposed on a good. Draw a graph to show: How the market quantity is affected How the price the consumer pays is affected (Pc) How the price the producer receives (after the tax) is affected. (Pp)
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midterm2 - Chapter 6 What is producer surplus? The net gain...

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