Econ 202 Test 2 Ch 7
Consumer surplus is
amount willing to pay - amount paid
Area below demand curve and above price measured
consumer surplus
A consumer's willingness to pay directly measures
how much a buyer values a good
Marginal buyer is the one who
leaves the market first if price raises
Efficiency in a market is achieved when
sum of producer and consumer surplus max
Economists typically measure efficiency using
total surplus
Producer surplus directly measures
well being of sellers
A seller is willing to sell a product only if the seller receives a price that is at least as great as the
cost of production
At the equilibrium price of a good, the good will be purchased by those buyers who
value good more than price
A supply curve can be used to measure producer surplus because it reflects
sellers cost
Cost is the measure of the sellers
willingness to sell
If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is
zero