ECON 2100 Lecture Notes - Lecture 7: Economic Surplus, Demand Curve
Document Summary
The study of how the allocation of resources affects economic well-being. How much of each good is produced. A buyers willingness to pay for a good refers to the maximum amount the buyer will pay for that good (how much they value the good) If the price of a good is , and only person a has a wtp of and person b has a wtp of , then only person a will buy the good. If there were a large numbers of buyers, the graph would have more of a curve vs. if there are a few number of buyers, the graph would look more like a staircase. At any q, the height of the d curve is the wtp of the marginal buyer. Marginal buyer - the buyer who would leave the market if p were any higher. Consumer surplus is the amount a buyer is willing to pay minus the amount the buyer actually pays.
