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concept of consumer and producer surplus by Christina Sy FILE CHRIST INA_SY_WEEK_2_SUMMARY.DOCX (14.42K) T IME SUBMIT T ED 19-JUL-2016 04:58PM WORD...

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concept of consumer and producer surplus by Christina Sy FILE TIME SUBMITTED 19-JUL-2016 04:58PM SUBMISSION ID 690594746 WORD COUNT 268 CHARACTER COUNT 1376 CHRISTINA_SY_WEEK_2_SUMMARY.DOCX (14.42K)
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Explain the following concepts using the concept of consumer and producer surplus: o Efficiency of markets The objective in the economic system is to find ways to maximize the society’s health. Buyers need to benefit from what they purchase and what is sold. When cost of goods is bought it is usually paid less than what the willingness to spend on the goods or services. This is known as consumer surplus. Likewise, vendors can sell a product at a higher price then economic price to produce a product this is known as producer surplus. The economic cost of vendor’s cost of materials and labor plus also the opportunity cost of the vendor’s time and labor. Consumer surplus equals the consumer’s willingness to pay subtracting the actual market price. Meanwhile the producer surplus is equal to the market plus subtracting the vendor’s economic cost of production. In competitive markets efficient producers are able to produce a product for less than the market price. Many markets are not competitive either buyers or sellers have the market power. Supply and demand reaches an equilibrium that favors the consumers. Efficiency of markets is actually a 2.3 billion dollars a year industry and growing each year. The industry employs nearly 150,000 people in the United States alone. There are negative factors that can affect sustain part of production. One factor that can effect production is pollution. These negative effects are not accounted for in consumer or producer surplus and therefore not a factor of total surplus. This analysis is the consumer, producer and total surplus of the economic concept tools in welfare economics.
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market efficiency.docx

Explain the following concepts using the concept of consumer and producer surplus: o Efficiency of markets The objective in an economic system is to find ways to maximize society’s wealth....

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