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ECO-Cha 07 - the area above the market supply curve and...

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7.1 Consumer surplus: The difference between the price a consumer is willing and able to pay for an additional unit of a good and the price the consumer actually pays (market price); for the whole market, it is the sum of all the individual consumer surplus; Producer surplus: The difference between what a producer is paid for a good and the cost of producing that unit of the good; for the market, it is the sum of all the individual sellers’ producer surplus-
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Unformatted text preview: the area above the market supply curve and below the market price ; Marginal cost: The cost of producing one more unit of a good; Producer surplus is a measurement of how much sellers gain from trading in the market; Total welfare gains: The sum of consumer and producer surplus; Deadweight loss 7.2 Welfare effects: The gains and losses associated with government intervention in market;...
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