Econ 201 1st Edition Lecture 23Outline of Last Lecture 1. Logic That Links the Perspectives2.Consumer surplus3.Producer surplusOutline of Current Lecture 1.Changes in CS and PS Due to Price Changes2.examples ~T shirts marketCurrent LectureChanges in CS and PS Due to Price Changes• Consider price changes with stable Demand and Supply relations.• Changes in P affect CS and PS in two distinct ways:– 1. P enters calculation of CS and PS directly.– 2. P changes affect CS and PS through induced changes in quantity, Q.• Geometric representation of CS and PS change is usually a trapezoid.Numerical Example ~ CS in a T-Shirt Market• Suppose P falls from 25 to 16; QD increases from 1,000 to 1,600.– Calculate CS at both prices.– Calculate ΔCS.Numerical Example ~ PS in a T-Shirt MarketThese 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.• Suppose P rises from 16 to 26; QS increases from 1,000 to 2,000.– Calculate PS at both prices.– Calculate
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