CS 8 ConsSurp Notes2

CS 8 ConsSurp Notes2 - Assume P = P: @ Q = X: MV X =...

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CLASS SUPPLEMENT # 8 (Page 1 of 2) CONSUMER SURPLUS NOTES MARGINAL VALUE (MV): The maximum consumer is willing to pay for Xth unit. (Height of demand curve at unit X) MARGINAL COST (MC): The price paid for Xth unit. MARGINAL CONS SURPLUS on Unit X (MCS X ) = MV X - MC X (Distance between D and Price at unit X) TOTAL VALUE (TV) = 3 MV of all units consumed. (Area under demand curve to quantity consumed) TOTAL COST (TC) = 3 MC of all units purchased. (TC = P X Q if P is same for all units) (Area under price line to quantity purchased) TOTAL CONS SURPLUS (TCS) = 3 MCS for all units consumed. (Area between demand curve and price line to quantity.)
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Unformatted text preview: Assume P = P: @ Q = X: MV X = __________ MC X = __________ MCS X = _________ @ Q = Q: TV Q = ___________ TC Q = ___________ TCS Q = __________ CS # 8 (Page 2 of 2) If P = 5 and Q = 4: MV 4 = __________ MC 4 = __________ MCS 4 = _________ Assume P = 6: MV 5 = $ ______________ Will consumer purchase unit 5? Will consumer purchase unit 6? Equilibrium Q = _____ TV = $___________ TC = $___________ TCS = $__________ Where is TCS maximized? at Q = _____________________ or more generally . .... D:\ECON202\CS\CS 8 ConsSurp Notes.wpd...
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This note was uploaded on 02/13/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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CS 8 ConsSurp Notes2 - Assume P = P: @ Q = X: MV X =...

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