Slides for video chapter 7 consumers producers and efficiency

1,184 views

Published on

0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,184
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
0
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide
  • In this chapter, we will learn about how economists measure buyer willingness to pay and seller willingness to sell
  • Slides for video chapter 7 consumers producers and efficiency

    1. 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. 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. 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. 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. 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. 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. 7. WHAT DOES CONSUMER SURPLUS MEASURE? 7 The benefit buyers receive from a good…. AS THEY PERCEIVE IT
    8. 8. COST AND WILLINGNESS TO SELL  Cost is the value of everything a seller must give up to produce a good 8
    9. 9. PRODUCER SURPLUS  The amount a seller is paid for a good MINUS the Seller’s cost of providing it 9
    10. 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. 11. MARKET EFFICIENCY  Efficiency: Maximizing total surplus received by all members of society 11  Total Surplus = Value to Buyers – Cost to Sellers
    12. 12. EQUALITY  Distributing economic prosperity uniformly among members of society 12
    13. 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. 14. HOW MUCH WOULD YOU PAY??? 14 See pages 148 and 149 n the text book
    15. 15. TERMS AND CONCEPTS  Willingness to pay  Consumer Surplus  Cost  Producer Surplus  Efficiency  Equality 15
    16. 16. SOURCES Principles of Macroeconomics, N. Gregory Mankiw, Sixth Edition: PowerPoint Slides prepared by: Andreea CHIRITESCU, Eastern Illinois University 16

    ×