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Chapter 7

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Department
Economics
Course
Economics 10a
Professor
Gregory Mankiw
Semester
Fall

Description
Ec 10a – Chapter 7 09/20/2013 Consumers, Producers, and the Efficiency of Markets Welfare Economics – the study of how the allocation of resources affects economic well­being Willingness to pay – the maximum amount that a buyer will pay for a good Consumer surplus – the amount a buyer is willing to pay for a good minus the amount the buyer  actually pays for it Marginal Buyer – the buyer who would leave the market first if the price were any higher The area below the demand curve and above the price measures the consumer  surplus in a market Consumer surplus measures the benefit that buyers receive from a good as the buyers themselves  perceive it Cost – the value of everything a seller must give up to produce a good Producer surplus – the amount a seller is paid for a good minus the seller’s cost o
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