Management MGT 3303 Chapter Notes - Chapter 3: Economic Surplus, Demand Curve, Efficient-Market Hypothesis

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Consumers, producers, and the efficiency of markets welfare economics is the study of how the allocation of resources affects economic well-being. In most markets, consumer surplus does reflect economic well-being. The area below the demand curve and above the price measures the consumer surplus in a market. Commented [oi1]: in any market, the equilibrium of supply and demand maximizes the total benefits received by all buyers and sellers combined. Commented [oi2]: consumer surplus measures the benefit buyers receive from participating in a market. Buyers who were already buying the good at the higher price are better off because they now pay less. 2. some new buyers enter the market because they are willing to buy the good at the lower price. As a result, the quantity demanded in the market increases. Cost of selling something is the value of everything a seller must give up to produce a good.

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