ECON 203 1st Edition Lecture 6Outline of Last Lecture I. CompetitionII. MarketIII. EquilibriumIV. Comparative Statisticsa. Examples with explanationsOutline of Current Lecture I. Consumer SurplusII. Producer SurplusCurrent LectureI. Consumer Surplus = TV – TR = total value – total expenditures = what consumers were willing to pay – what they had to pay = TV – P * QII. Producer Surplus = TR – TC = total revenue – total costs = what suppliers were paid – what they had to be paid to supply the goods = profits = P * Q – TCGains from Trade = PS + CSIII. It is sometimes helpful to think of this in terms of marginal values, and then add up the marginal values to get a total value. It is true mathematically the area under a marginal curve will add up to the total. That is, if we add up all the area under a MV curve out to These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.quantity Q, it will add up to the total use value of Q units. If we add up all the area undera marginal cost curve out to quantity Q, it will add up to the total cost of producing Q units.IV. Consumer Surplus continuedV. Producer Surplus continueda. Finally, this is much easier to see if you put Supply and Demand togetherVI. Consumer surplus is a measure of the welfare of consumers. The higher the consumer surplus, the better off consumers are.VII. Producer surplus is a measure of the welfare of producers. The higher the producers surplus (profits), the better off producers are.VIII. The total gains from trade is the sum of PS + CS. It is a measure of welfare to