wellfare In the market
Wellfare
* In a market ->
any additional utility a consumer or producer mightget over and above their reservation
buying or selling price
wellfare for the consumer
buyers Willing
*
to pay varying prices for a particular good
Why
* do buyers have differentWips for the same good? < thelr relative Income levels
> their preferences
↑ these goods give Individuals differing levels of Satisfaction
as the
*
price ↓ In the market, the number of goods demanded I
demand
* curve < shows demanded
a by Individuals In a marketat various ppoints
< downward-sloping when "Law or Demand" is being obeyed
·
snows demanded
a t When Pr
Demand curve
I snows all prices consumers are Wip:. shows utility derived from this product
B 100= -
2Q
·
actually pay
consumers dont
> 20th Customer IS Wip R60 . . Item
MUSt
EHCI WTP:
give them Utility /SGEISSACTION
R60 Worth of
doesnt, they would spend their money
If It usually there Is I price In
somewhere else the Market
I customer buying 35th Item Is only willing to
do
so because the Item gives them R30 UtIItY1
SALISGACtIOR
*
now Is the price consumers pay determined? - Firm with power: price determined by the firm
< firm power:price determined
without by Marketforces
always
* I price all consumers
pay when buying the product
If
* market price IS R30:>35 Sales Will likely Occur
>final customer In the market
IS WTP R30 for the good because Itgives them R30 worth of satisfaction
person wanting
*
to buy 36th good I would not choose this product
> their WTP:p 100
= -
2(36)
=
R28
. .sale does nothappen as they would have gotten R28 Worth of satisfaction ata costof R30
c onsumers
* buying first 34 goods 1stc ustomers utility:p 100
= -
2(1) =
R98
customer's utility:p 100 2(2) R96
=
< 2nd
-
=
I all consumers before 35th consumer value the productmore than the price they pay for It:WTP P
economic
* rent> the difference between whatthe consumers would have pald and now much they actually pay
>consumer surplus
> WTP -
P These examples assumed:
- the Items sold could only be
natural numbers
> non-zero Integers
⑭this
assumption:
> add the differences between
up all Ghatt he quantities are natural
whatthese consumers would have numbers)
pald and the amount
they actually
pald A = > can define the area between
the demand curve and the
equilibrium price to the
consumer
surplus consumer surplus
consumer surplus would
be:
I(100 30). 35
= -
R1225
=
consumer
* the difference between
surplus: the demand curve and the equilibrium price
Wellfare
* In a market ->
any additional utility a consumer or producer mightget over and above their reservation
buying or selling price
wellfare for the consumer
buyers Willing
*
to pay varying prices for a particular good
Why
* do buyers have differentWips for the same good? < thelr relative Income levels
> their preferences
↑ these goods give Individuals differing levels of Satisfaction
as the
*
price ↓ In the market, the number of goods demanded I
demand
* curve < shows demanded
a by Individuals In a marketat various ppoints
< downward-sloping when "Law or Demand" is being obeyed
·
snows demanded
a t When Pr
Demand curve
I snows all prices consumers are Wip:. shows utility derived from this product
B 100= -
2Q
·
actually pay
consumers dont
> 20th Customer IS Wip R60 . . Item
MUSt
EHCI WTP:
give them Utility /SGEISSACTION
R60 Worth of
doesnt, they would spend their money
If It usually there Is I price In
somewhere else the Market
I customer buying 35th Item Is only willing to
do
so because the Item gives them R30 UtIItY1
SALISGACtIOR
*
now Is the price consumers pay determined? - Firm with power: price determined by the firm
< firm power:price determined
without by Marketforces
always
* I price all consumers
pay when buying the product
If
* market price IS R30:>35 Sales Will likely Occur
>final customer In the market
IS WTP R30 for the good because Itgives them R30 worth of satisfaction
person wanting
*
to buy 36th good I would not choose this product
> their WTP:p 100
= -
2(36)
=
R28
. .sale does nothappen as they would have gotten R28 Worth of satisfaction ata costof R30
c onsumers
* buying first 34 goods 1stc ustomers utility:p 100
= -
2(1) =
R98
customer's utility:p 100 2(2) R96
=
< 2nd
-
=
I all consumers before 35th consumer value the productmore than the price they pay for It:WTP P
economic
* rent> the difference between whatthe consumers would have pald and now much they actually pay
>consumer surplus
> WTP -
P These examples assumed:
- the Items sold could only be
natural numbers
> non-zero Integers
⑭this
assumption:
> add the differences between
up all Ghatt he quantities are natural
whatthese consumers would have numbers)
pald and the amount
they actually
pald A = > can define the area between
the demand curve and the
equilibrium price to the
consumer
surplus consumer surplus
consumer surplus would
be:
I(100 30). 35
= -
R1225
=
consumer
* the difference between
surplus: the demand curve and the equilibrium price
