ECON 202 1st Edition Lecture 5 Outline of Last Lecture Equilibrium Shifts in Equilibrium Outline of Current Lecture Consumer and Producer Surplus Total Surplus Current Lecture Consumer and Producer Surplus Consumer Surplus CS benefit you get from market price difference between willingness to pay and price Demand is your willingness to pay No matter what the market price is someone will have the willingness to pay higher or someone will have the willingness to pay lower EX Superbowl tickets the first market is expensive but within the second market there are people willing to pay even more 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 You were made four dollars better off for paying the market price and for that one individual is the consumer surplus Total Consumer Surplus All individuals surplus added up together TS Consumer Surplus CS Producer Surplus PS Producer Surplus benefit producers get from the market price When there is a greater demand there is typically a better economy Efficient can t make someone better off without making someone worse off Dead Weight Loss consumer and producer surplus and where no transactions are longer taking place Qm Forced Lower Quantities Dead Weight Loss consumer and producer surplus occur transactions no longer take place Things To Know About Markets Markets are Efficient Markets are not necessarily fair Markets work due to Property Rights are the rights of owners of valuable items whether resources or goods to dispose of those items they choose Prices as Signals is any piece of information that helps people make better economic decisions Markets can fail Market failure occurs when a market fails to be efficient Monopolies these occur when one party prevents mutually beneficial trades from occurring Externalities actions of individuals sometimes have side effects on the welfare of others that the markets don t take into account ex pollution Public Goods ex police some people can t get the help from police at the expense of others Information Problems consumers and producers don t have the same knowledge or information ex used cars