ECON 1B03 Lecture Notes - Lecture 5: Economic Surplus, Reservation Price, Economic Equilibrium

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ECON 1B03 Full Course Notes
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ECON 1B03 Full Course Notes
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Consumer surplus: every buyer in an economy is only willing to pay up to a certain amount for a good/service. They got bene t of which is the amount of money they didn"t have to pay because p is lower than what they"re willing to pay. Anyone who would have paid more than gets a bene t: willingness-to-pay - what they actually pay. How a price change a ects cs if price decreases to , cbgf is addition to cs for initial consumers. New cs = area of raef = 1/2*70*600 = ,000. A produce who was happy and willing to take now receives 50$. His bene t is the he gets above what he was willing to take. Any producer who receives more than what they were willing to take enjoys a bene t. Total producer surplus, ps, is the area under the selling price and above the supply curve.

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