321_9 - ECON 321Spring 2011 Lecture 10 Chapter 14:Consumer...

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ECON 321Spring 2011: Lecture 10 Chapter 14:Consumer Surplus
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Reminders Exam 1 next Thursday 2/23 Practice exam materials posted on aplia and Blackboard. Review for Exam, next Tuesday 2/21 (second half of class) Questions and Answers only – I will not have prepared notes. I will only answer your questions. So come prepared. Guest lecture on Wednesday. Chapter 16.
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Definitions Inverse Demand: re-arrange demand to get price as a function of quantity Net consumer’s surplus : Net benefits of consumption Reservation price – price paid Area underneath inverse demand above price paid Gross consumer’s surplus: Area underneath inverse demand curve
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Compensating variation : The income change after a price change required to return the consumer to initial utility level Equivalent variation : The income change required before a price change to make the consumer exactly as well off as the price change would Producer’s surplus:
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321_9 - ECON 321Spring 2011 Lecture 10 Chapter 14:Consumer...

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