Consumer and Producer Surplus
In This Chapter
- Consumer surplus: the benefits of being in the market
- Deriving the demand curve using consumer surplus
- Producer surplus and the gains from trade
- Deriving the supply curve using producer surplus
- How price controls, sales taxes, and deadweight loss reduce society’s welfare
Imagine a new game show called Name Your Price. The show’s host stands between two tables at which contestants are seated. On one side are three buyers; on the other side are three sellers. The host shows a picture of a beautiful red convertible Mustang. The buyers are told to type into their computer what price they are ...