Chapter 7 Consumers, Producers, and the Efficiency of Markets

Chapter 7 Consumers, Producers, and the Efficiency of Markets

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 7: Consumers, Producers, and the Efficiency of Markets I. Welfare Economics: the study of how the allocation of resources affects economic well-being. Potential Buyers Willingness to Pay Aleisha $59 Brad 45 Claudia 35 Darren 25 Edwina 10
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Willingness to Pay : The maximum price a buyer is willing to pay for a good Consumer Surplus (C.S.) : The amount a consumer is willing to pay minus the price they actually pay If the Price =$30 Q = C. S. =
Background image of page 2
Area below the D Curve & above the price measures the C. S Page 3 of 8 Potential Buyers Willingness to Pay Aleisha $59 Brad 45 Claudia 35 Darren 25 Edwina 10
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
If the Price =$20 Q =
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Marginal Buyer = C. S. = Decrease in the Price benefits: 1) 2) From Individuals to a large market Area of a = Consumer Surplus = Producer Surplus : The amount a Seller is paid minus the sellers costs. Page 5 of 8 Potential Sellers Cost Alex $45 Donna 35 Carlos 25 Betty 15 Andrew 5 Cost: The value of EVERYTHING (Opportunity Cost) a seller must give up to produce a good. If the Price =$30 Q = P. S. = Total Surplus: Total Net Gain to Consumers & Sellers from trade T.S. = Consumer Surplus + Producer Surplus Page 7 of 8 Markets are efficient Equality?...
View Full Document

Page1 / 8

Chapter 7 Consumers, Producers, and the Efficiency of Markets

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online