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Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
Slides for video chapter 7 consumers producers and efficiency
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Slides for video chapter 7 consumers producers and efficiency

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  • In this chapter, we will learn about how economists measure buyer willingness to pay and seller willingness to sell
  • Transcript

    • 1. PRINCIPLES OF MACROECONOMICS Text: Principles of Macroeconomics, N. Gregory Mankiw, Sixth Edition. Instructor: Sue Guzek, Kansas State University Salina Music: We Gonna Make You… By Troy “Trombone Shorty” Andrews and Orleans Avenue – Orleans and Claiborne 1 CONSUMERS, PRODUCERS, AND EFFICIENCY OF MARKETS
    • 2. CUSTOMER SURPLUS AND WILLINGNESS TO PAY 2 Willingness to pay is the maximum amount a buyer is willing to pay for a good
    • 3. HOW MUCH ARE YOU WILLING TO PAY FOR… 3 Consumer Surplus is the amount a buyer is willing to pay for a good MINUS the amount the buyer actually pays
    • 4. CONSUMER SURPLUS 4 Consumer Surplus is the amount a buyer is willing to pay for a good MINUS the amount the buyer actually pays MINUS
    • 5. CONSUMER SURPLUS 5 A vanilla Bean Frappucino sells for $3.20 On a hot August day, (after a night of studying, you might be willing to pay $4 Your Consumer Surplus that day would be….. 80 ¢
    • 6. CONSUMER SURPLUS AND THE DEMAND CURVE  Willingness to Pay= height of the Demand Curve  Surplus = space between the curve and the price 6  As Price falls, Qd rises  Consumer Surplus rises because of: lower price and new buyers
    • 7. WHAT DOES CONSUMER SURPLUS MEASURE? 7 The benefit buyers receive from a good…. AS THEY PERCEIVE IT
    • 8. COST AND WILLINGNESS TO SELL  Cost is the value of everything a seller must give up to produce a good 8
    • 9. PRODUCER SURPLUS  The amount a seller is paid for a good MINUS the Seller’s cost of providing it 9
    • 10. MEASURING SELLER SURPLUS  Producer Surplus = Price – Cost to Produce 10  When price rises, Qs rises and Producer Surplus rises, because of increased price and new producers
    • 11. MARKET EFFICIENCY  Efficiency: Maximizing total surplus received by all members of society 11  Total Surplus = Value to Buyers – Cost to Sellers
    • 12. EQUALITY  Distributing economic prosperity uniformly among members of society 12
    • 13. EVALUATING MARKET EQUILIBRIUM  FREE MARKETS:  Allocate goods to buyers who value them most, as measured by willingness to pay  Allocate demand to sellers who produce at lowest cost  Produce the quantity of goods to maximize the sum of consumer and producer surplus 13
    • 14. HOW MUCH WOULD YOU PAY??? 14 See pages 148 and 149 n the text book
    • 15. TERMS AND CONCEPTS  Willingness to pay  Consumer Surplus  Cost  Producer Surplus  Efficiency  Equality 15
    • 16. SOURCES Principles of Macroeconomics, N. Gregory Mankiw, Sixth Edition: PowerPoint Slides prepared by: Andreea CHIRITESCU, Eastern Illinois University 16

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