ECONOM 1014 Lecture Notes - Lecture 2: Peanut Butter, Hamburger Helper, Demand Curve
Document Summary
1/26/15: supply and demand is the core of microeconomics, will develop, demand curve. Gains from trade: quantity demanded, quantity consumers would like to buy at a given price, quantity demanded decreases as price increases o. Suppose the market price is a lb. Assume that people will either buy a lb. or not. If a person is willing to pay a price higher than the market price, that difference is the consumer surplus. If a person"s max price is the market price, their consumer surplus is 0: these consumers are right at the margin marginal consumer. If a consumer"s max price is below the market price, their consumer surplus is 0. It isn"t negative because he doesn"t have to buy it. For individual: cs is difference between willingness to pay for a given unit of the good (point on demand curve) and what they actually pay.
