Chapter 4 Consumer and Producer Surplus
- Georgia State University
- Economics 2105
- Chapter 4 Consumer and Producer Surplus
Last Modified: 2011-06-28
Both Individual and Total
='s total net gain
Purchases yield a net benefit to consumer , b/c consumer typically pays a price less than his or her willingness to pay for the good. Right to buy a good at going price is a valuable thing in itself
Only need demand and supply curves to calculate
TCS generated by consumers is = to area below demand curve but above the price
Area or right triangle A=(h x b)/2
↑Price will ↓consumer surplus & ↑producer surplus
Illustrates "gains from trade" concept. Leads to market efficiency.
- Property rights Rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose
- Economic signals is any piece of info that helps people make better economic decisions
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