08 Efficiency - WelfareEconomics economicwellbeing x x...

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    Welfare Economics Welfare economics   is the study of how  the allocation of   resources affects  economic well-being. Buyers and sellers receive benefits from taking  part in the market.  The equilibrium in a market maximizes the total  welfare of buyers and sellers. 
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    Welfare Economics Consumer surplus measures economic  welfare from the buyer’s side. Producer surplus measures economic  welfare from the seller’s   side.
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    Consumer Surplus Consumer surplus   is the  amount a buyer is willing to pay  for a good minus the amount the  buyer actually pays for it.
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    1968 Chevy Camaro
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    Willingness-to-Pay for a 1968 Chevy Camaro Buyer Willingness to Pay Alan 10,000 Beth 8,000 Carl 7,000 Diane 2,000 Eduardo 1,000
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    Demand Schedule for a 1968  Chevy Camaro Price Buyer(s) Quantity Demanded p > 10,000 -- 0 8,000 < p <= 10,000 A 1 7,000 < p <= 8,000 AB 2 2,000 < p <= 7,000 ABC 3 1,000 < p <= 2,000 ABCD 4 p <= 1,000 ABCDE 5
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