ECON 201 Lecture Notes - Lecture 10: Economic Surplus, Demand Curve, Economic Equilibrium

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pinkturtle125

14 Nov 2016

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Recall that consumer surplus is the area between the demand curve and the price line (up to the quantity consumed: this is the sum of the net benefit to consumers from every unit they consume. Producer surplus is the area between the demand curve and the price line (up to the quantity produced: this is the net benefit to producers from selling good. Total surplus is the sum of consumer surplus and producer surplus: this is the net benefit of everything that is produced and consumed, both to the producers and the consumers. This is the area between the supply and demand curve up to the quantity produced and consumed. The consumer surplus from the qth unit is the willingness to pay for this unit minus the price. The producer surplus from the qth unit is the price minus the cost of producing this unit.

Related Questions

Economic efficiency in a competitive market is achieved when

A. economic surplus is equal to consumer surplus.

B. the marginal benefit equals the marginal cost from the last unit sold.

C. consumers and producers are satisfied.

D. producer surplus equals the total amount firms receive from consumers minus the cost of production.

browngoat320

1. A shift outward of the production possibilities frontier line indicates

a. economic expansion has occurred and more of each good or resource can be produced.

b. a change between two goods produced.

c. less of both goods can be produced.

d. the producer is less efficient and incurring a reduction in economic wealth.

2. If the demand curve and supply curve arrive at an equilibrium price of $5 and quantity of 6, while the height of the consumer surplus triangle is 5, and the height of the producer surplus triangle is 5, it is correct to say

a. consumer surplus equals 30.

b. consumer surplus equals 15.

c. consumer surplus and producer surplus are both the same and equal 3.

d. producer surplus equals 30.

scarletgerbil742

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 201 Lecture Notes - Lecture 10: Economic Surplus, Demand Curve, Economic Equilibrium

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