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Consumer Surplus, Producer Surplus and the Efficiency

Consumer Surplus, Producer Surplus and the Efficiency -...

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Consumer Surplus, Producer  Surplus and the Efficiency of  markets Lecture 1
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Key Questions: What is consumer’s surplus? How is it  related to the demand curve? What is producer’s surplus? How is it  related to the Supply curve? Do markets produce a desirable allocation  of resources? Or could the market  outcome be improved upon?
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Welfare Economics Allocation of resources refers to: How much of a good is being produced? Which producers produce it? Which consumers consume it? Welfare Economics  studies how the  allocation of resources affects economic  well-being We will first consider the well-being of  buyers
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PRODUCERS, AND THE  EFFICIENCY OF MARKETS 4 Willingness to Pay (WTP) A buyer’s  willingness to pay  for a good is the  maximum amount the buyer will pay for that good. WTP measures how much the buyer values the good. name
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