The document discusses microeconomics concepts related to consumers, producers, and market efficiency. It specifically examines the pizza market in Riyadh using supply and demand graphs. The graphs show the equilibrium price and quantity before and after a tax is implemented. They illustrate how the tax affects different metrics like total revenue, the tax paid by buyers and sellers, and the seller's profits. The concepts of consumer and producer surplus are also introduced.

1. Microeconomics
Lecture 7
!
Consumers, Producers, and
the Efficiency of Markets

2. 1. What is the equilibrium price before the tax?
2. What is the equilibrium quantity?
3. If the tax is 40 SAR, what will be the new price?
4. If the tax is 40 SAR, how many pizza would be sold?
5. What will be the total revenue with the new tax?
6. How much tax will the seller pay?
7. How much tax will the buyer pay?
8. How much will the total tax be?
9. How much did the seller earn after paying the tax?
10. Why isn’t the new price 90?

3. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

4. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

5. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

6. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

7. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

8. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

9. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

10. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

11. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

12. 100
90
80
70
60
50
40
30
20
10
0
Supply
0 1 2 3 4 5 6 7 8 9 10
Price
Quantity
Pizza Tax
Demand

13. Microeconomics
Lecture 7
!
Consumers, Producers, and
the Efficiency of Markets

14. Economic Surplus
!
Consumer - Buyer
!
Producer - Seller

15. Value
Versus
Price

16. Sellers value less
than price
Buyers value more
than price

17. Surplus Value
is equal to
the difference
between
value and price

18. Economic Surplus
is equal to
seller surplus value
plus
buyer surplus

19. Riyadh Pizza Market
Buyers

20. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

21. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

22. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

23. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

24. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

25. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

26. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

27. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

28. Riyadh Pizza Market
Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

29. Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Price
29
Riyadh Pizza Market

30. Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Price
29
Riyadh Pizza Market

31. Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Price
29
Riyadh Pizza Market

32. Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Price
29
Riyadh Pizza Market

33. Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Price
29
Riyadh Pizza Market

34. Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Price
29
Riyadh Pizza Market

35. Buyers
40
35
30
25
20
15
10
5
0
26
28
30
32
34
36
38
40
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Price
29
Riyadh Pizza Market

36. Buyers
40
35
30
25
20
15
10
5
0
40 Price
26
28
30
32
34
36
38
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
35
Riyadh Pizza Market

37. Buyers
40
35
30
25
20
15
10
5
0
40 Price
26
28
30
32
34
36
38
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
35
Riyadh Pizza Market

38. Buyers
40
35
30
25
20
15
10
5
0
40 Price
26
28
30
32
34
36
38
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
35
Riyadh Pizza Market

39. Buyers
40
35
30
25
20
15
10
5
0
40 Price
26
28
30
32
34
36
38
Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
35
Riyadh Pizza Market

40. Riyadh Pizza Market
Sellers

41. Riyadh Pizza Market
Sellers
40
35
30
25
20
15
10
5
0
Dominos Pizza Hut Dr Gale

42. Riyadh Pizza Market
Sellers
40
35
30
25
20
15
10
5
0
20
Dominos Pizza Hut Dr Gale

43. Riyadh Pizza Market
Sellers
40
35
30
25
20
15
10
5
0
25
20
Dominos Pizza Hut Dr Gale

44. Riyadh Pizza Market
Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale

45. Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale
Price
29
Riyadh Pizza Market

46. Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale
Price
29
Riyadh Pizza Market

47. Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale
Price
29
Riyadh Pizza Market

48. Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale
Price
35
Riyadh Pizza Market

49. Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale
Price
35
Riyadh Pizza Market

50. Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale
Price
35
Riyadh Pizza Market

51. Sellers
40
35
30
25
20
15
10
5
0
30
25
20
Dominos Pizza Hut Dr Gale
Price
35
Riyadh Pizza Market

52. Always Two Values in a
trade

53. Always Two Values in a
trade
Difference between what I am
willing to pay for and the price
Difference between what I am
willing to sell for and the price

54. How many firms does it
take for competition?

55. How many firms does it
take for competition?
Only One
As long as they can
enter the market