微观经济学The Analysis of Competitive Markets.pptVIP

Chapter 9 Chapter 9 The Analysis of Competitive Markets Topics to be Discussed Evaluating the Gains and Losses from Government Policies The Efficiency of a Competitive Market Minimum Prices Price Supports and Production Quotas Import Quotas and Tariffs The Impact of a Tax or Subsidy Consumer and Producer Surplus When government controls price, some people are better off May be able to buy a good at a lower price But what is the effect on society as a whole? Is total welfare higher or lower and by how much? A way to measure gains and losses from government policies is needed Consumer and Producer Surplus Consumer surplus is the total benefit or value that consumers receive beyond what they pay for the good Assume market price for a good is $5 Some consumers would be willing to pay more than $5 for the good If you were willing to pay $9 for the good and pay $5, you gain $4 in consumer surplus Consumer and Producer Surplus The demand curve shows the willingness to pay for all consumers in the market Consumer surplus can be measured by the area between the demand curve and the market price Consumer surplus measures the total net benefit to consumers Consumer and Producer Surplus Producer surplus is the total benefit or revenue that producers receive beyond what it costs to produce a good Some producers produce for less than market price and would still produce at a lower price A producer might be willing to accept $3 for the good but get $5 market price Producer gains a surplus of $2 Consumer and Producer Surplus The supply curve shows the amount that a producer is willing to take for a certain amount of a good Producer surplus can be measured by the area between the supply curve and the market price Producer surplus measures the total net benefit to producers Consumer and Producer Surplus 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 lo