sp25-econ101 econ101
Lecture 05: Consumer surplus, producer surplus, and efficiency Lecture 05: Consumer surplus, producer surplus, and efficiency
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Surplus measures gains from trade
Worked linear-market example
Why the competitive allocation is efficient
Figures from the lecture
Same numbers in a graph
If market price is $620:
Consumer surplus, graphically
If price goes down…
In a graph:
Producer surplus, graphically
If price goes up…
If price goes down…
Solution
Solution
Who buys and who sells?
Equilibrium and efficiency
If supply increases: