ECON 3535 1st Edition Lecture 6Current LectureTotal Willingness to Pay- total willingness to pay: people who are willing to pay the market price or higher for a good or service- consumer demand curve- TC = total cost- Marginal cost = change in total cost / change in output- net benefits: subtract cost from total willingness to payo total benefit – cost - efficiency equimarginal principle goal = maximize net benefitsPresent Value Calculation:- PV = RV/(1+r) to the power of n- FV = future value - r = interest rate (discount rate)- n = number of time periods in the future- ex: n=2Costs and Benefits:- stock = current supply (potential supply) (ex: forest)- flow = production from the stock (trees/day)Benefits:1) use value = market value2) option value = value placed on future use of the resource3) nonuse value = willingness to pay for resource preservation - total willingness to pay = total benefits of 1 + 2 + 3- valuation methods:o market priceThese 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.o estimation model and estimate coefficients ex: estimating local property valueso stated preference = future outcomes or
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