ECON 1051 1st Edition Lecture 17 Outline of Last Lecture I. Producer Surplus II. Total Economic Surplus Outline of Current Lecture I. Externalities and Environmental Goods a. ExamplesCurrent LectureI. Externalities and Environmental Goods a. Above is the market for two bedroom apartments. (Example A)1. C represents the welfare of tenants that used to have apartments but no longer do 2. E represents the welfare of property owners who are no longer offering units for rent Consumer Surplus Producer Surplus Total SurplusThese 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. AB CD EFPrice ceiling (for example A)Price floor (for example B)MARKET EQUILIBRIUMBefore PriceCeilingA+B+C D+E+F A+B+C+D+E+FAfter Price Ceiling A+B+D F A+B+D+FGAIN LOSS LOWER3. D redistributes the wealth from sellers to buyers i. Started as a product of producer surplus but after the price ceiling, redistributed to the consumer surplus 4. C and E = deadweight loss 5. Price ceiling creates a shortage b. Above is the market for milk (Example B)Consumer Surplus Producer Surplus Total SurplusBefore Price Floor A+B+C D+E+F A+B+C+D+E+FAfter Price Floor A B+D+F A+B+D+FLOSS GAIN LOWER1. B is a transfer from consumers to producers2. C and E = deadweight
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