ECON101 Lecture Notes - Economic Surplus, Profit Maximization, Price Elasticity Of Demand
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ECON101 Full Course Notes
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Market demand is derived by horizontally summing individual demand curves. (red line is market demand) Market demand is more elastic than individual demand curves. Consumer "s surplus is the difference between what a consumer is willing to pay, and what the consumer has to pay; essentially, it is a benefit to the consumer. Calculating consumer surplus depends on the type of good: discrete good: Cs = (9-5)+(7-5)+(6-5) = i. e. the consumer saves . He is willing to pay more than that () but doesn"t need to. General formula for consumer surplus in a discrete good case: Cs = (wtp1 p1)+(wtp2-p1)+: continuous good: ex. P = 32 4q, p = 8. Solved for q, q = 6 (in diagram, 2) Solved for p, p = 32 (in diagram, 1. 50) The management of the park is trying to choose a price strategy.