ECON 1000 Lecture Notes - Lecture 6: Opportunity Cost, Market Price, Demand Curve
Document Summary
Chapter 7: welfare economic: the study of how the allocation of resources affects economic well- being, consumer: Consumer surplus = willingness to pay market price. Consumer surplus: a buyer"s willingness to pay minus the amount the buyer actually pays. Willingness to pay: the maximum amount that a buyer will pay for a good. Buyer is eager to buy good at a price less than willingness to pay. Refuse to pay good at a price more than willingness to pay. Price equal to willingness to pay: if the price exactly the same, ppl would be happy buying it or keeping money. Using demand curve (related to the consumer surplus) The area below the demand curve and above the price measures the consumer surplus in a market. The difference between this willingness to pay and the market price is each buyer"s consumer surplus.
