Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

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Consumer, Producer and Community Surplus • How much would you be willing to pay for this? •Or this?

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Transcript of Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

Page 1: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

Consumer, Producer and Community Surplus

• How much would you be willing to pay for this?

• Or this?

Page 2: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

Consumer SurplusConsumer surplus The difference

between the highest price a consumer is willing to pay and the price the consumer actually pays.

Page 3: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

Producer SurplusProducer surplus The difference between the lowest price a firm would have been willing to accept and the price it actually receives.

Page 4: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

Community Surplus of Competitive Markets

Community Surplus Equals the Sum of Consumer Surplus and Producer Surplus

Economic efficiency

Occurs where the sum of consumer surplus and producer surplus is at a maximum.

Page 5: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

The incidence of taxation on Community

Surplus

Deadweight welfare loss froman indirect tax

Page 6: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

Deadweight loss from an indirect tax

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Before-taxsituation

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Consumersurplus

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Consumersurplus

Producersurplus

Before-taxsituation

Deadweight loss from an indirect tax

Page 9: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

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Tax revenuefor government

Deadweight loss from an indirect tax

Page 14: Consumer, Producer and Community Surplus How much would you be willing to pay for this? Or this?

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Deadweight loss from an indirect tax


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