ECON 1010H Chapter Notes - Chapter 5: Deadweight Loss, Economic Surplus, Price Floor

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17 Apr 2017
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Resource allocation method: market price, command system, majority rule, contest, first come, first serve, lottery, personal characteristics, force. Value is what you get and price is what you pay. The marginal benefit is the maximum price that we are willing to pay for another unit of good or service. The market demand curve is the horizontal sum of the individual demand curves and is formed by adding the quantities demanded at each individual price. Consumer surplus - is the excess benefit we receive from a good over the amount paid for it. Marginal cost is the minimum cost that producers must receive to induce them to offer one more unit of good or service for sale. Producer surplus- is the excess of the amount received from the sale of a good or service over the cost of producing it. The consumer surplus and producer surplus can be used t measure deficiency of a market.

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