Lecturenotes5ECON2310F12

Consumer surplus as the shaded area between the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ge in Demand: Total change in demand is given by the subsGtuGon effect plus the income effect. s m •  Formally, !x = !x + !x •  Note: •  Giffen Good: The income effect is stronger than the subsGtuGon effect. Demand decreases with a price decrease. •  A Giffen Good has to be a (very) inferior good. Intermediate Microeconomics ECON*2310/Annen 8 SubsGtuGon and Income Effect of Price Changes (cont.) Intermediate Microeconomics ECON*2310/Annen 9 3 12 ­09 ­19 Consumer Surplus •  If we are able to say something about `consumer surplus,’ we are able to say something about the welfare of consumers. •  Consumer surplus as the shaded area between the demand curve and price. •  What is the meaning of this area? Intermediate Microeconomics ECON*2310/Annen 10 Consumer Surplus (cont.) Intermediate Microeconomics ECON*2310/Annen...
View Full Document

This note was uploaded on 12/21/2012 for the course ECON 2310 taught by Professor Eadomiat during the Fall '10 term at University of Guelph.

Ask a homework question - tutors are online