EC120 Lecture : Economics Day 5.docx

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EC120 Full Course Notes
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Willingness to pay- how much a consumer values a good (are they willing to pay at a certain price) A wtp demand curve looks like a staircase because it works with ranges (between and 4 people buy) This will still hold true if there is a higher number of buyers but it is not noticeable and looks like a traditional demand curve. At any quantity the height of the demand curve is the wtp of the buyer. Marginal buyer- the buyer who will be lost if the price is raised. Consumer surplus- is the amout a buyer is willing to pay minus what the buyer actually pays. (cs= wtp-p: cannot be negative because if price is higher than wtp the consumer will not buy the product. The consumer surplus is the area found below the demand curve and above the price.

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