Econ Chapter 7

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  1. Welfare Economics
    The study of how allocation of resources affects economic well being of the economy
  2. Consumers willingness to pay directly measures
    • How much a buyer values a good
  3. Consumer Surplus
    buyer's willingness to pay - actual amount paid by buyer
  4. Consumer Surplus Area
    • The area below the demand curve and above the price
  5. If price of good falls (if all things being equal)
    Consumer surplus increases.
  6. A supply curve can be used to measure
    • producer's surplus because it reflects the sellers cost
  7. Producer's Surplus
    The amount a seller is paid for a good minus the seller's cost of providing it
  8. Producer's Surplus Area
    • The area below the price above the supply curve
  9. Total Surplus
    • Consumer Surplus + Producer Surplus
Card Set
Econ Chapter 7
Economics Chapter 7
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