Study guide for second midterm

Study guide for second midterm - Econ 102 - Professor...

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Econ 102 - Professor Amuedo-Dorantes 1 Study Guide for Second Midterm - Econ 102 Chapter 7: (1) What is willingness-to-pay and how you can use information on consumers' willingness-to- pay to compute consumer surplus? How does it change as prices increase/decrease? (2) How you can use information on the cost of production to derive the producers' surplus? How does it change as prices increase/decrease? (3) How do we define the consumer surplus? (4) How do we define the producer surplus? (5) Know how to indicate/identify the consumer and producer surplus graphically. (6) Know that the competitive market maximizes consumer and producer surplus by assigning goods to those consumers who value them most highly and the production of the goods to producers who can produce them at the lowest cost. (7) What are the two occasions in which CS and PS is not maximized? a. When someone has market power: i.e. we don’t have a perfectly competitive market b. When there are externalities: i.e. we are not taking into account the well-being of
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This note was uploaded on 12/16/2010 for the course ECON 102 taught by Professor Clague during the Fall '08 term at San Diego State.

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Study guide for second midterm - Econ 102 - Professor...

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