ECON 1B03 Lecture Notes - Lecture 5: Coase Theorem, Free Rider Problem, Club Good

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ECON 1B03 Full Course Notes
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ECON 1B03 Full Course Notes
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Unit 5. 1 : economic welfare consumer + producer surplus economic welfare. Bene ts consumers + rms receive by participating in the market (buying + selling) consumer surplus. Every buyer in economy is only willing to pay up to certain amount for good or service. Max amount that buyer will pay for good. Anyone would have paid more than 50$ gets bene t. Bene t = willingness to pay 50$ they actually payed. If price drops to 30$ producer surplus. Every selling in economy has bottom line. Least amount of money it is willing to take in order to producer + offer a good for sale. Lowest price supplier will take to produce good + offer it for sale. When seller receives more than they are willing to take , they enjoy a bene t. Bene t producer receives when price he receives is greater than his bottom line willingness to sell.

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