ch6 - Chapter 6 Consumer behaviour Consumer surplus and the...

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Chapter 6 – Consumer behaviour Consumer surplus and the law of demand Exercise 6.1: Maximizing consumer surplus Exercise 6.2: Measuring consumer surplus for all buyers Exercise 6.3: Measuring consumer surplus for all buyers Consumer surplus and the law of demand Total value measures the willingness to pay for a given level of consumption of a good. Marginal value (MV) measures the willingness to pay \ for an additional unit of consumption of a good measures the incremental total value of consuming an additional unit of a good. is assumed to FALL as more of a good is consumed (i.e. diminishing marginal value). Consumer surplus = Total value – Total spending. A consumer surplus maximizer sets MV = P obeys the law of demand has a demand curve equal to their MV curve. …achieves consumer surplus equal to the area between their demand curve and the price line. Market demand
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This note was uploaded on 01/17/2012 for the course ECONOMICS 120 taught by Professor Mesta during the Fall '10 term at Wilfred Laurier University .

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ch6 - Chapter 6 Consumer behaviour Consumer surplus and the...

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