ECO 2013 Study Guide - Chief Operating Officer, Lead, Mira-Bhayandar Municipal Corporation
Document Summary
Rational behavior: mb >/= mc, marginal benefit the additional benefit received from undertaking one more unit of an activity, decreasing first units have high and each additional unit brings less, marginal cost the additional cost incurred from undertaking one more unit of an activity, increasing produce cheapest units first. Q demanded = q supplied: b + pd = b + ps, b is the number, solve for p and then plug back in to find qd or qs, what happens if you pick a price greater than equilibrium p, you can tell from plugging it in (and also the graph), that quantity supplied is greater than quantity demanded. Economic surplus (total surplus: es = consumer surplus + producer surplus, consumer will consume if mb > mc (p, consumer"s valuation, the reservation price, is the highest they"d be willing to pay, consumer surplus is the difference between the consumer"s reservation price and the price they actually had to pay.
