ECON 2001.01 Chapter Notes - Chapter 4: Marginal Utility, Masala Chai, Economic Surplus

• School: Ohio State University
• Department: Economics
• Course: ECON 2001.01
• Professor: Michelle Mallon

Document Summary

Economic efficiency, government price setting, and taxes a. b. c. d. 4. 3 government intervention in the market: price floors and price ceilings. Should the government control apartment rents? a. b. c. d. Rent control puts a legal limit on the rent that landlords can charge for an apartment. Since rent-controlled rents are usually far below market rents, it seems clear that this doesn"t make landlords better off. Consumer and producer surplus a. b. c. d. Surplus: something that remains above what is used or needed. Economists use the idea of surplus to refer to the benefit that people derive from engaging in market transactions. Consumer surplus is the dfference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer receives. Producer surplus is the difference between the lowest price a firm would be willing to accept for a good or service and the price it actually receives.