ECN 121 Chapter Notes - Chapter 4: Economic Surplus, Perfect Competition, Market Failure

• School: University of Portland
• Department: Economics
• Course: ECN 121
• Professor: Hanig Ross

Document Summary

Explain what willingness to pay means in economics and how it is related to an individual"s consumer surplus. Willingness to pay for a good is the max price at which he/she would buy that good. It is related to an individual"s consumer surplus because that is the net gain that a buyer achieves from the purchase of a good. So when a customer wants to buy a book for and the store is selling it for , the customer"s individual consumer surplus would be. Calculate an individual"s and the total consumer surplus. Adding all the buyers" individual consumer surpluses together=tcs. Calculate and analyze how changing prices affect consumer surplus. When the price of a good falls, consumer surplus increases. When the price of a good rises, consumer surplus decreases. Explain what a seller"s cost means in economics and how it is related to an individual producer"s surplus.