surplus

surplus - APPLICATION OF THE INTEGRAL I: CONSUMER AND...

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APPLICATION OF THE INTEGRAL I: CONSUMER AND PRODUCER SURPLUS 1. Supply and demand One of the most fundamental economic models is the law of supply and demand for a certain product (milk, bread, fuel etc.) or service (transportation, health care, education etc.) in a free-market environment. In this model the quantity of a certain item produced and sold is described by two curves, called the supply and demand curves of the item. Definition 1.1. The supply function or supply curve gives the quantity of an item that producers will supply at any given price. The demand function or demand curve gives the quantity that consumers will demand at any given price. We will denote the price per unit by p and the quantity supplied or demanded at that price by q . As is the convention in economics, we will always write p as a function of q . Thus the supply curve will be denoted by the formula p = S ( q ) and represented by a graph where the x and y axes correspond to q and p values respectively. Similarly, we will use p = D ( q ) to denote the demand curve. As you might expect, the supply function
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This note was uploaded on 01/14/2012 for the course MATH 105 taught by Professor Malabikapramanik during the Fall '10 term at UBC.

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surplus - APPLICATION OF THE INTEGRAL I: CONSUMER AND...

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