微观经济学英文课件chapter_9The Analysis of Competitive Markets.ppt

Chapter 1 Chapter 9 The Analysis of Competitive Markets 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 Price Supports and Production Quotas Import Quotas and Tariffs The Impact of a Tax or Subsidy Evaluating the Gains and Losses fromGovernment 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 Evaluating the Gains and Losses fromGovernment Policies--Consumer and Producer Surplus To determine the welfare effect of a governmental policy we can measure the gain or loss in consumer and producer surplus. Welfare Effects Gains and losses caused by government intervention in the market. Change in Consumer andProducer Surplus from Price Controls Change in Consumer andProducer Surplus from Price Controls Observations: The total loss is equal to area B + C. The total change in surplus = (A - B) + (-A - C) = -B - C The deadweight loss is the inefficiency of the price controls or the loss of the producer surplus exceeds the gain from consumer surplus. Change in Consumer andProducer Surplus from Price Controls Observation Consumers can experience a net loss in consumer surplus when the demand is sufficiently inelastic Effect of Price ControlsWhen Demand Is Inelastic Price Controls and Natural Gas Shortages 1975 Price controls created a shortage of natural gas. What was the deadweight loss? Price Controls and Natural Gas Shortages Supply: QS = 14 + 2PG + 0.25PO Quantity supplied in trillion cubic feet (Tcf) Demand: QD = -5PG + 3.75PO Quantity demanded (Tcf) PG = price of natural gas in $/mcf and PO = price of oil in $/b. Price Controls and Natural Gas Shortages PO = $8/b Equilibrium PG = $2/mc