ECON 160 Lecture Notes - Lecture 12: Economic Surplus, Economic Equilibrium, Demand Curve
23 Sep 2016
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Equilibrium price is the price where the quantity demanded is equal to the quantity supplied. At an equilibrium there is no incentive for price to move. The equilibrium price in the hot dog market is . 00. The supply curve is the opportunity cost to supply. Consumer surplus: person"s value of a good the actual price. There is no such thing as negative consumer surplus, because the consumer doesn"t enter the market when the price is higher than their value of it. * the opportunity cost includes a reasonable profit. There is no such thing as negative producer surplus, because the producer doesn"t enter the market when the price is lower than their opportunity cost. Total consumer surplus: the sum of everyone"s consumer surplus. Social surplus: the total consumer surplus + the total producer surplus. Elasticity: quantity demanded or supplied responds to price. Inelastic goods are demanded or supplied the same regardless of price.
