Download Consumer and Producer Surplus

Survey
yes no Was this document useful for you?
   Thank you for your participation!

* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project

Document related concepts

Economic calculation problem wikipedia, lookup

Fei–Ranis model of economic growth wikipedia, lookup

History of economic thought wikipedia, lookup

Economics of digitization wikipedia, lookup

Schools of economic thought wikipedia, lookup

Economics wikipedia, lookup

Supply and demand wikipedia, lookup

Chicago school of economics wikipedia, lookup

Surplus value wikipedia, lookup

Ancient economic thought wikipedia, lookup

Microeconomics wikipedia, lookup

Transcript
AP Economics
Mr. Bernstein
Module 49:
Consumer and Producer Surplus
October 23, 2014
AP Economics
Mr. Bernstein
Consumer Surplus
• The difference between what a consumer is willing to pay for a good or
service and what they actually have to pay
2
AP Economics
Mr. Bernstein
Willingness to Pay
• Willingness to Pay is found along the demand curve
• Purchases that can be made at lower prices create a net gain
in happiness for the consumer; measured in dollars we call it
Consumer Surplus
3
AP Economics
Mr. Bernstein
Calculating Consumer Surplus
• The area below the
demand curve or WTP line
and above the price
• Area = ½ base * height
4
AP Economics
Mr. Bernstein
Producer Surplus
• The difference between what a producer must receive to sell a unit and the
actual price they receive
5
AP Economics
Mr. Bernstein
Cost and Producer Surplus
• Producer Cost is found along the supply curve
• Producer Surplus is the difference between price and the
cost of producing a unit
6
AP Economics
Mr. Bernstein
Calculating Producer Surplus
• The area above the
supply curve
and below the price
• Area = ½ base * height
7
AP Economics
Mr. Bernstein
Changes in Price Affect Consumer and Producer
Surplus
• If price decreases:
• Consumer surplus increases(willingness to pay is the same, but the
price paid is lower)
• Producer surplus decreases (costs are the same but price received is
lower)
• If price increases:
• Consumer surplus decreases (willingness to pay is the same but the
price paid is higher)
• Producer surplus increases (costs are the same but the price received
is higher)
8
AP Economics
Mr. Bernstein
Total Surplus = Consumer Surplus + Producer
Surplus
9