ECON 2000 Lecture : Economics Notes 9 18

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azuremammoth471

15 Mar 2019

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*the difference btw the max price a buyer is willing and able to pay for a good or service and the price is actually paid. Value a consumer gets from buying a product, less its price. Area below the demand curve and above the price. *the difference btw the price sellers receive for a good and the minimum or lowest price for which they would have sold the good. Value the producer sells a product for, less the cost of producing it. Area above the supply curve but below the price the producer receives. Total surplus- the sum of consumers" surplus and producers" surplus. *must use: *base*height to calculate the surplus (formula for area of a triangle) Combo of producer and consumer surplus is maximized at market equilibrium. Marginal benefit- additional benefit to a consumer from consuming one more unit of a good or service.

Related Questions

7) Indicate whether each of the following statements is true or false, and explain why.

A. Producer surplus tends to fall as the supply curve becomes more elastic.

B. Consumer surplus tends to rise as demand becomes more elastic.

C. The market demand curve indicates the minimum price buyers are willing to pay at each level of production.

D. The market supply curve indicates the minimum price required by sellers as a group to bring forth production.

E. Consumer surplus is the amount that consumers are willing to pay for a given good or service above and beyond the amount actually paid.

bronzeoyster264

10. Producer surplus is the A) difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept. B) difference between producers' revenues and opportunity costs of production. C) opportunity cost of production. D) area under the supply curve. E) total amount paid for the good.

True or False:

1. Consumer surplus is the buyer's willingness-to-pay minus the seller's opportunity cost of production.

2. If your willingness-to-pay for a hamburger is $3 and you paid $2, then your consumer surplus is $5.00

3. The opportunity cost of production for a seller includes the implicit cost of the seller's time.

4. The height of the supply curve at a selected quantity is the seller's opportunity cost of producing that marginal unit.

5. Total surplus (total well-being) is the seller's cost of production minus the buyer's willingness-to-pay.

6. The competitive market equilibrium outcome is efficient because it allocates the produced output to the buyers who place the highest value on the good

7. Producer surplus is the area above the supply curve and below the price.

8. The competitive market equilibrium outcome maximizes total surplus (total well-being)

9. Producing and consuming more of a good will always increase the total surplus(total well-being).

redelephant805

ECON 2000 Lecture : Economics Notes 9 18

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