CAS EC 101 Lecture Notes - Lecture 7: Economic Surplus, Demand Curve, Economic Efficiency
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CAS EC 101 Full Course Notes
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Chapter 7: consumers, producers, and the efficiency of markets. Welfare economics: the study of how the allocation of resources affects economic well-being. Benefits that buyers and sellers receive from engaging in market transactions. How society can make these benefits as large as possible. In any market, the equilibrium of supply and demand maximizes the total benefits received by all buyers and sellers combined. Willingness to pay: maximum amount that a buyer will pay for a good, how much that buyer values the good. Consumer surplus: amount a buyer is willing to pay for a good minus amount the buyer actually pays for it, willingness to pay minus price paid. Consumer surplus: measures the benefit buyers receive from participating in a market, closely related to the demand curve. Demand schedule: derived from the willingness to pay of the possible buyers. The table shows the demand schedule for the buyers (listed in.