jan 25

jan 25 - 1/25/11 Lecture Notes Total Benefit = Sum of...

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1/25/11 Lecture Notes Total Benefit = Sum of Marginal Benefit Consumer Surplus=Net Benefit= Total Benefit – Total Cost or while looking at the graph, find the area of the triangle that is formed with demand curve and both the x and y axis (take half of price difference * total quantity sold in price market) So far we considered o Why is the Demand curve downward sloping o How do actors maximize utility o How do we get a demand cure for the whole market o What is consumer surplus? Next: Supply Curve o Example: A men’s magazine will pay Leroy 10 cents per word to write fiction article. He must decide how to divide his time between writing fiction, which he can do at a constant rate of 200 words per hour. Versus Picking Apples which he does at a diminishing marginal return. For each hour Leroy spends picking apples, he loses $20 he could have earned writing pulp fiction. He should thus spend an additional hour picking as long as he will add at least $20 worth of apples to his total harvest (What he has available to sell)
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This note was uploaded on 05/08/2011 for the course IR 213 taught by Professor Staff during the Spring '08 term at USC.

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jan 25 - 1/25/11 Lecture Notes Total Benefit = Sum of...

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