MGEA01H3 Lecture Notes - Lecture 3: Demand Curve, Price Floor, Market Failure

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA01H3
• Professor: Michael Ho

Document Summary

Mga01h3 f: lecture 3 - consumer and producer surplus. Textbook: microeconomics, second canadian edition, by krugman, wells, au and parkinson. What competitive surplus is and it"s relationship to the demand curve. What producer surplus is and it"s relationship to the supply curve. What total surplus is and and how it can be used to measure the gains from the trade and to illustrate why markets work so well. Why property rights and prices as economic signals are critical to the smooth functioning of a market. Why markets typically lead to efficient outcomes despite the fact that they sometimes fail. A consumer"s willingness to pay for a good at the maximum price at which he or she would buy that good. When a price of a good is equal to or less than a customer"s willingness to pay, the potential customer will purchase the good.