Consumer surplus individual p 16 maximum prices

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Unformatted text preview: e price. Consumer Surplus: Individual P 16 Maximum prices willing to pay for 1, 2, 3, and 4 movies 15 14 13 Market price 12 11 10 9 0 Consumer surplus 1 2 3 D 4 5 6 7 8 Q Consumer Surplus P 20 Consumer Surplus 19 18 17 Market price 16 15 10 Amount Paid D 5 0 1 2 3 4 5 6 7 8 Q Price Discrimination Price • the same product, with the same costs of production, is sold at different prices to different consumers Price Discrimination Price • can be based on – age – time – volume of purchases • to be successful, must – identify groups with different demands – separate these groups – ensure lower priced item isn’t re-sold Producer Surplus the price of a good minus the opportunity cost to produce it Producer surplus from the surplus 3rd pizza 3rd 25 Price 20 S = MC MC Market price Producer surplus 15 10 Total revenue revenue 5 0 5 Cost of making pizza 10 Quantity Price (dollars per pizza) An Efficient Market An 25 Consumer surplus S Marginal cost Margina...
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