L9X-elasticity jpw - Surplus & Elasticity Measures...

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microL9-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Lecture 9 Jennifer P. Wissink ©2009 John M. Abowd and Jennifer P. Wissink, all rights reserved. September 24, 2009
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microL9-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Announcements F09 Today: Finish up Chapter 4 and move into Chapter 5 QUIZ #4-econ1110-F09 is posted and due Thursday Oct 1 Getting ready for prelim #1 – See Problem Set page Reviews (mark your date-books) Monday, October 5th, 6-7:30pm - for about 120 people Tuesday, October 6th, 1-2:30pm - for about 150 people. Stay tuned for more prelim 1 info next week. FROM THE NEWS: Prices and gasoline demand, by Paul Krugman (5/9/08) http://krugman.blogs.nytimes.com/2008/05/09/prices-and-gasoline-demand/?scp= The Last Word In Business (2/16/09) N.Y. Gov. Aims To Tax Downloads, Including Porn http://www.npr.org/templates/story/story.php?storyId=100746980
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microL9-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ EPI of a Per Unit Commodity Tax
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microL9-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ EPI of a Per Unit Commodity Tax
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microL9-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Surplus Measures: Goal: to measure the gains from trade in $. Three concepts to introduce: Consumers’ Surplus ($CS) Producers’ Surplus ($PS) Net Social Surplus ($NSS)
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microL9-F09- http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Selling My Old House Old address: 133 Tompkins St. New address: 132 Tompkins St. Problem: we bought the new house before selling the old one. Our minimum selling price = $55,000. Potential buyer Abe: maximum buying price = $45,000 So, no deal with Abe.
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http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Selling My OLD House for This One Potential (and last) buyer Betty: maximum price = $95,000 Remember: Our minimum selling price = $55,000. Trade should occur! Net social surplus on trade = $40,000 Division of surplus to the Wissink’s and to Betty depends on the strike price - what we sell the house for. Suppose we sold it for $90,000.
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This note was uploaded on 02/01/2012 for the course ECON 1101 at Cornell University (Engineering School).

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L9X-elasticity jpw - Surplus & Elasticity Measures...

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