consumer, producer and community surplus how much would you be willing to pay for this? or this?
TRANSCRIPT
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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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Consumer SurplusConsumer surplus The difference
between the highest price a consumer is willing to pay and the price the consumer actually pays.
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Producer SurplusProducer surplus The difference between the lowest price a firm would have been willing to accept and the price it actually receives.
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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.
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The incidence of taxation on Community
Surplus
Deadweight welfare loss froman indirect tax
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Deadweight loss from an indirect tax
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Before-taxsituation
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Deadweight loss from an indirect tax
Consumersurplus
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Consumersurplus
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Before-taxsituation
Deadweight loss from an indirect tax
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Deadweight loss from an indirect tax
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Deadweight loss from an indirect tax
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Deadweight loss from an indirect tax
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Deadweight loss from an indirect tax
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Tax revenuefor government
Deadweight loss from an indirect tax
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Deadweightloss from tax
Deadweight loss from an indirect tax