ECON 142 1st Edition Lecture 4Outline of Last Lecture I. Supply CurveOutline of Current Lecture II. Inverse Supply and Demand FunctionIII.EquilibriumIV.Consumer/Producer SurplusV.Deadweight LossVI.Price CeilingCurrent LectureExam is 2/9/15-Next Monday: Covers Chapters 1,3,4Inverse demand function: P =a-b*Qa is the y-interceptb is slopeDemand Function: Q is on the left side of the equationInverse Supply function: P = a+b*QSupply Function: Q is on the left side of the equationTake two equations to solve for equilibriumExample:P=90-.5*Q and P=10+1.5*QSo solve for Q10+1.5*Q = 90-.5*QThen plug the number you found into Q to solve for P from the original equationsKnow all supply and demand curve shifters. Chapter 4: Consumer/Producer SurplusConsumer Surplus: the difference between price consumer HAS to pay and price consumer WOULD BE WILLING to pay. Pg 102 The triangle to the left of the equilibrium, top quadrant.Measuring consumer surplus: 1/2(b*h) area of a triangle- If supply curve shifts left or right, you will have to recalculate consumer surplus using the new curve.Changes to Consumer Surplus- Shifting either curve-or both curves- can affect the value of consumer surplus- If consumer surplus increases, consumers as a whole are better off- If consumer surplus decreases, consumers as a whole are worse offThese 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.Producer Surplus: difference between lowest price a firm would accept and the price it actually receives. Pg 105. The triangle under consumer surplus, left of the