 Demand curve must reflect the consumers full willingness to pay  Supply curve must reflect all the costs of production © 2013 McGraw-Hill Ryerson Ltd.

Slides:



Advertisements
Similar presentations
Market Failures: Public Goods and Externalities
Advertisements

Consumer & Producer Surplus Pages Mr. Henry AP Economics.
Market Failures: Public Goods and Externalities
Market Failures: Public Goods and Externalities
10/22/20141 Consumers, Producers, and the Efficiency of Markets Chapter 7.
Copyright © 2004 South-Western Welfare Economics Welfare economics is the study of how the allocation of resources affects economic well-being. Buyers.
© 2010 Pearson Addison-Wesley CHAPTER 1. © 2010 Pearson Addison-Wesley.
CHAPTER 5 Efficiency.
Appendix Tools of Microeconomics. 1. The Marginal Principle Simple decision making rule We first define: Marginal benefit (MB): the benefit of an extra.
1. If Bill is willing to pay $10 for one good
when quantity demanded = quantity supplied. Market equilibrium: when quantity demanded = quantity supplied.
Welfare Analysis. Ranking Economic systems  Objective: to find a criteria that allows us to rank different systems or allocations of resources.  This.
3 Web - 1 Copyright McGraw-Hill/Irwin, 2005 Changes in Supply and Demand Lettuce American Flags Pink Salmon Gasoline Sushi Preset Prices Nonpriced Goods.
Part 3 Markets and Efficiency
Slides prepared by Dr. Amy Peng, Ryerson University CHAPTER 4 EXTENSIONS OF DEMAND AND SUPPLY ANALYSIS AND THE EFFICIENCY OF MARKETS Part Two: Microeconomics.
3 SUPPLY AND DEMAND II: MARKETS AND WELFARE. Copyright © 2004 South-Western 7 Consumers, Producers, and the Efficiency of Markets.
Chapter 6 Market Efficiency and Government Intervention.
Chapter 3 Demand, Supply and the Market
Copyright © 2004 South-Western 7 Consumers, Producers, and the Efficiency of Markets.
Consumer and Producer Surplus Lecture 8. Assignment for Next Lecture Do Homework 6 on ‘Homework Assignment’ due on Sunday, 11:55 PM Read Chapter 7 Topics.
Taxes & Deadweight Loss
The imposition of a per-unit tax on Supply Exhibit the effect of the tax on: Pre-tax Price and Quantity Pre-tax Total expenditure on the good Pre-tax Producer.
© 2007 Thomson South-Western. Consumers, Producers and the Efficiency of Markets Revisiting the Market Equilibrium –Do the equilibrium price and quantity.
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Welfare Economics u Buyers and sellers gain from the market. u The total welfare.
Consumer and Producer Surplus: Effects of Taxation
Chapter Five: Welfare Analysis. Consumer Surplus.
Elasticity of Demand and Supply
Consumer and Producer Surplus Consumer and producer surplus are important concepts to use when discussing economic welfare. This presentation looks at.
Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?
Consumer and Producer Surplus
Welfare economicsslide 1 Analysis of Competitive Markets In this section, we examine the social welfare implications of competitive markets. The approach.
Chapter 7 notes.
Demand and Supply: an Introduction
CONSUMER SURPLUS, PRODUCER SURPLUS, AND THE EFFICIENCY OF MARKETS
Copyright 2008 The McGraw-Hill Companies 18 Extensions of Demand and Supply Analysis.
Principles of Micro Chapter 7: “Consumers, Producers, and the Efficiency of Markets” by Tanya Molodtsova, Fall 2005.
Copyright © 2011 Cengage Learning 7 Consumers, Producers, and the Efficiency of Markets.
5.1 – An Economic Application: Consumer Surplus and Producer Surplus.
Consumer Surplus Consumer surplus The difference between the highest price a consumer is willing to pay and the price the consumer actually pays.
AP Econ Week#21 Winter 2014 Ch#4 & Ch#5. Economics 2/2/15 No School: Snow Day#2 Photo: Mr. Milewski Grosse Ile, MI 2/1/15.
Elasticity, Consumer Surplus, and Producer Surplus Chapter 6 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 Consumer welfare from a good is the benefit a consumer gets from consuming that good in excess of the cost of the good.  If you buy a good for exactly.
Chapter 3: Competitive Dynamics How Competitive Markets Operate Market Equilibrium:  The stable point at which demand and supply curves intersect PRICE.
Demand for and Supply of Greebes PRICE $ per Greebe QUANTITY DEMANDED (millions of Greebes) QUANTITY SUPPLIED (millions of Greebes) $
Market Failures: Public Goods and Externalities
 Demand-pull inflation occurs when an increase in aggregate demand pulls up the price level 1©2013 McGraw-Hill Ryerson Ltd. Chapter 15, LO2.
Consumers, Producers, and the Efficiency of Markets Chapter 7.
Copyright © 2004 South-Western Welfare Economics Welfare economics is the study of how the allocation of resources affects economic well-being. Buyers.
Chapter 6 Combining Supply and Demand. Equilibrium- where the supply and demand curves cross. Equilibrium determines the price and the quantity to be.
Effect of a tax on price and quantity S + tax S O P1P1 Q1Q1 D P Q.
Math – Additional Applications to Business and Economics 1.
We’ve seen that competitive markets bring “order” -- price adjusts to balance supply and demand. Any other desirable properties of competitive markets?
Consumer Surplus and Producer Surplus Chapter 6 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
MICROECONOMICS BU 224 SeminarThree. Agenda Course Issues and Questions Course Issues and Questions Chapters Three and Four: Questions and Problems from.
CDAE 272 International Economic Development Spring 2008.
Agenda Review AP Exam Progress Review Unit Test Review Begin Discussion of Market Failures Homework – Online (see due date)
Copyright © 2004 South-Western Welfare Economics Welfare economics is the study of how the allocation of resources affects economic well-being. Buyers.
Short Run, Long Run and Efficiency Micro Chapter 18.
D1D1 The 4 shifts of the Supply and Demand Curve Shift 1- Demand Away D0D0 S 0 Price (P) Quantity (Q) P0P0 Q0Q0 P1P1 Q1Q1 4. ∆Q S; Movement along the S.
Chapter 6 Elasticity, Consumer Surplus, and Producer Surplus
Market Failures: Public Goods and Externalities
Market Failures: Public Goods and Externalities
Mehdi Arzandeh, University of Manitoba
Market Failures: Public Goods and Externalities
Chapter Six: Welfare Analysis.
The Economic Principles of: Supply and Demand
Market Failures: Public Goods and Externalities
Market Failures: Public Goods and Externalities
Market Failures: Public Goods and Externalities
Market Failures: Public Goods and Externalities
Presentation transcript:

 Demand curve must reflect the consumers full willingness to pay  Supply curve must reflect all the costs of production © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 1

 Difference between what a consumer is willing to pay for a good and what the consumer actually pays  Extra benefit from paying less than the maximum price © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 2

(1) Person (2) Maximum Price Willing to Pay (3) Actual Price (Equilibrium Price) (4) Consumer Surplus Bob$13$8$5 (=$13-$8) Barb128 4 (=$12-$8) Bill118 3 (=$11-$8) Bart108 2 (=$10-$8) Brent98 1 (= $9-$8) Betty88 0 (= $8-$8) © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 3

Price (per bag) Quantity (bags) D Q1Q1 P1P1 Consumer Surplus Equilibrium Price © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 4

 Difference between the actual price a producer receives and the minimum price they would accept  Extra benefit from receiving a higher price © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 5

(1) Person (2) Minimum Acceptable Price (3) Actual Price (Equilibrium Price) (4) Producer Surplus Carlos$3$8$5 (=$8-$3) Courtney48 4 (=$8-$4) Chuck58 3 (=$8-$5) Cindy68 2 (=$8-$6) Craig78 1 (=$8-$7) Chad88 0 (=$8-$8) © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 6

Price (per bag) Quantity (bags) S Q1Q1 P1P1 Equilibrium price Producer surplus © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 7

Price (per bag) Quantity (bags) S Q1Q1 P1P1 D Consumer surplus Producer surplus © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 8

Quantity (bags) Price (per bag) c S Q1Q1 Q2Q2 D b d a e Efficiency loss from underproduction © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 9

c S Q1Q1 Q3Q3 D b f a g Quantity (bags) Price (per bag) Efficiency loss from overproduction © 2013 McGraw-Hill Ryerson Ltd. Chapter 5, LO2 10

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com. Inc. All rights reserved.