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Lecture 37

ECON 1010 Lecture 37: Lecture 37

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ECON 1010
Laura K.Brown

oS82 1. The difference between this willingness to pay and the market price is each buyers consumer surplus 2. The total area below the demand curve and above the price is the sum of the consumer surplus in the market for a good or service How A Lower Price Raises Consumer Surplus: 1. Because buyers always want to pay less for the goods they buy, a lower price makes buyers of a good better off 2. Consumer surplus is the area above the price and below the demand curve 3. As price increase, consumer surplus decreases, and vise versa 4. This increase in consumer surplus is composed of two parts 1. Those buyers who were already buying Q1 of the good at the higher price are better off because they now pay less – the increase in consumer surplus of existing buyers is the reduction in the amount they pay 1. New buyers enter the market because they are now willing to buy the good at the lower price – the quantity demanded in the market increases from Q1 to Q2 2
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