Change in Quantity Demanded Price a to B: Increase in guantity demanded A 10 B Quantity Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999
Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Change in Quantity Demanded Price Quantity D0 4 7 10 6 A A to B: Increase in quantity demanded B
Change in Demand Price Do to d,: Increase in Demand 6 13 Quantity Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999
Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Price Quantity D0 D1 6 7 D0 to D1 : Increase in Demand Change in Demand 13
Consumer Surplus The value consumers get from a good but do not have to pay for Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999
Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Consumer Surplus: • The value consumers get from a good but do not have to pay for
I got a great deal! That company offers a lot of bang for the buck! Gateway 2000 provides good value Total value greatly exceeds total amount paid Consumer surplus is large Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999
Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 I got a great deal! • That company offers a lot of bang for the buck! • Gateway 2000 provides good value. • Total value greatly exceeds total amount paid. • Consumer surplus is large
I got a lousy deal That car dealer drives a hard bargain! I almost decided not to buy it! They tried to squeeze the very last cent from me! · Total amount paid is close to total value Consumer surplus is low Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999
Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 I got a lousy deal! • That car dealer drives a hard bargain! • I almost decided not to buy it! • They tried to squeeze the very last cent from me! • Total amount paid is close to total value. • Consumer surplus is low