1. The Laws of Demand and Supply

18. Diminishing Marginal Utility Principle of Diminishing Marginal Returns: general tendency for marginal utility to decrease as the quantity of a good consumed increases – Can be used to determine one’s individual demand curve for a product – Measured in units of utility

19. Consumer Surplus Consumer Surplus = marginal benefit from a good minus the price paid for that good, summed over the quantity consumed How to calculate consumer surplus…

31. Producer Surplus Producer Surplus: amount seller is paid minus the seller’s cost – Also the area under the equilibrium price and above the supply curve – How to calculate producer surplus… How to calculate producer surplus… (HINT: Same way as consumer surplus…)

32. STOP HERE!!!