2Lecture

2Lecture - Lecture 2 Aggregating Preferences and Cost 14:54...

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Lecture 2 14:54 Aggregating Preferences and Cost Aggregating preferances Marginal willingness to pay – The value of ta good to consumer is the marginal  willingness to pay The total willingness to pay equals the total amount consumer is willing to pay to attain a  certain consumption level The good can be purchased for $17 (P=17) The amount consumed equals 3 (Q=3) Total willingness to pay equals  $81 = 36 + 26 + 17 Surplus The benefit to consumers fro a good equals consumers willingness to pay Benefit increases as curve shifts upward Costs Marginal cost is the price of one additional unit Total cost is the price of all the produced units Welfare Economics Welfare analysis is a systematic method of evaluating economic implimentations of  alternative allocations. It answers the following questions: Is a given resource allocation efficient? Who gaines and who loses under various resource allocations? By how much?
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2Lecture - Lecture 2 Aggregating Preferences and Cost 14:54...

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