{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

CHAPTER 2B CONS & PROD SURPLUS S12

CHAPTER 2B CONS & PROD SURPLUS S12 - PLAN OF...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 © Charles R. Hulten 2011 1 ECON 306 CHAPTER 2 and 3.4 CONSUMER SURPLUS: ALTERNATIVE DOLLAR METRIC OF UTILITY © Charles R. Hulten 2011 2 PLAN OF LECTURE WILLINGNESS TO PAY CONSUMER SURPLUS MAXIMUM CONSUMER SURPLUS PRODUCER SURPLUS APPLICATION: TAXES AND ELASTICITIES APPLICATION: THE IPOD PROBLEM AGAIN © Charles R. Hulten 2011 3 AREA UNDER THE CONSUMER DEMAND CURVE Price Quantity Demand Curve P = 6 - Q 6 6 5 0 1 © Charles R. Hulten 2011 4 WILLINGNESS TO PAY: A DOLLAR METRIC OF UTILITY Price Quantity Demand Curve P = 6 - Q 6 6 5 0 1
Image of page 1

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

View Full Document Right Arrow Icon
2 © Charles R. Hulten 2011 5 WILLINGNESS TO PAY & THE AREA UNDER THE DEMAND CURVE Price Quantity 6 6 5 0 1 5 4 3 2 4 3 2 1 a b c d e f Willingness-to-Pay unit 1 = a = 5.5 unit 2 = b = 4.5 unit 3 = c = 3.5 unit 4 = d = 2.5 unit 5 = e = 1.5 unit 6 = f = 0.5 Total = ? © Charles R. Hulten 2011 6 ADD SUPPLY CURVE Price Quantity Demand Curve P = 6 - Q 6 6 0 Supply = MC = 3 3 3 © Charles R. Hulten 2011 7 CONSUMER SURPLUS ON FIRST UNIT OF THE GOOD Price Quantity Demand Curve P = 6 - Q 6 6 0 1 Supply = MC = 3 3 3 © Charles R. Hulten 2011 8 Price
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.