ECON 103 Lecture Notes - Lecture 7: Price Elasticity Of Demand, Economic Surplus

• School: Simon Fraser University
• Department: Economics
• Course: ECON 103
• Professor: Iryna Dudnyk

Document Summary

6, exchange without production (fixed amount of good available) Darlene has a chicken that lays 20 eggs/day. Mv(n) = mv(d) => no more gains from trade are possible. 25 - 20 + q(d) = 12 - 0. 4q(d) Q(d) = 5 inefficient (unexploited gains from trade) Can they gain from trading 16th egg: For q(d) = 4 ; mv(d) = 12 - 0. 4 x 4 = 10. 4. If they trade more, => they will lose cs and ss. Total gains = cs + ss are maximized. *** skip the box where mv"s are put together ***