Chapter 9 The Analysis of Competitive Markets
Chapter 9 The Analysis of Competitive Markets
Topics to be Discussed a Evaluating the Gains and Losses from Government Policies--Consumer and Producer Surplus a The Efficiency of a Competitive Market ■ Minimum Prices Chapter Slide 2
Chapter 9 Slide 2 Topics to be Discussed ◼ Evaluating the Gains and Losses from Government Policies--Consumer and Producer Surplus ◼ The Efficiency of a Competitive Market ◼ Minimum Prices
Topics to be Discussed a Price Supports and Production Quotas a Import Quotas and Tariffs a The Impact of a Tax or Subsid Chapter Slide 3
Chapter 9 Slide 3 Topics to be Discussed ◼ Price Supports and Production Quotas ◼ Import Quotas and Tariffs ◼ The Impact of a Tax or Subsidy
Evaluating the gains and Losses from Government Policies--Consumer and Producer Surplus ■ Review Consumer surplus is the total benefit or value that consumers receive beyond what they pay for the good Producer surplus is the total benefit or revenue that producers receive beyond what it cost to produce a good Chapter Slide 4
Chapter 9 Slide 4 Evaluating the Gains and Losses from Government Policies--Consumer and Producer Surplus ◼ Review ⚫ Consumer surplus is the total benefit or value that consumers receive beyond what they pay for the good. ⚫ Producer surplus is the total benefit or revenue that producers receive beyond what it cost to produce a good
Consumer and Producer Surplus Price 10 Consumer Surplu Between O and Q consumers aand B receive a net gain from buying the product consumersurplus Producer Between 0 and Qo Surplus producers receive a net gain fror D selling each product producer surplus Quantity Consumera Consumer B Consumer c
Producer Surplus Between 0 and Q0 producers receive a net gain from selling each product-- producer surplus. Consumer Surplus Consumer and Producer Surplus Quantity 0 Price S D 5 Q0 Consumer C 10 7 Consumer A Consumer B Between 0 and Q0 consumers A and B receive a net gain from buying the product-- consumer surplus