ECON 203 1nd Edition Lecture 7Outline of Last Lecture I. Comparative Static Analysisa. Change in quantity demandedb. Change in supplyc. Steps to perform an analysisOutline of Current Lecture I. Consumer/Producer Surplusa. Consumer Surplusb. Producer Surplusc. Gains from TradeCurrent LectureI. Consumer/Producer Surplustotal value(TV)-what consumers receiveThe total use value of Q is shadedTotal Cost (TC)=Total Expenditures(TE)=Total Revenue(TR)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.TE- what consumers spentTR= P*Q*= what sellers receive by selling Q* unitsa. Consumer surplusConsumer surplus(CS)-the difference between what consumers receive and the value spentCS=TV-TR=TV-P*QThe higher the CS, the better off consumers areb. Producer surplusProducer Surplus(PS)=TR-TC= P*Q-TCThe higher the PS, the better off producers arec. Gains from tradeGains from trade= CS+PSIt’s a measure of welfare of
View Full Document
Unlocking...