Economic Surplus and Deadweight Loss

1. Microeconomics
Lecture 8
Economic Surplus
Deadweight Loss

2. Economic Surplus
Consumer
Producer

3. Market Demand for Pizza
Highest Price
Consumer
Willing to Pay
Austin $10
Brittany $9
Carl $8
Duane $7
Ed $6

5. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

6. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

7. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

8. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

9. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

10. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

11. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00 Price
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

12. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00 Price
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

13. Market Demand for Pizza
Highest Price Consumer
Consumer Price
Willing to Pay Surplus
Austin $10 $5 $5
Brittany $9 $5 $4
Carl $8 $5 $3
Duane $7 $5 $2
Ed $6 $5 $1
Summary $40 $25 $15

14. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00 Price
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

15. $10.00
$9.00
$8.00
$7.00
Price
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

16. $10.00
$9.00
$8.00
Price
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

17. Market Demand for Pizza
Highest Price Consumer
Consumer Price
Willing to Pay Surplus
Austin $10 $7.50 $2.50
Brittany $9 $7.50 $1.50
Carl $8 $7.50 $0.50
Duane $7 $7.50 -$0.50
Ed $6 $7.50 -$1.50
Summary

18. Market Demand for Pizza
Highest Price Consumer
Consumer Price
Willing to Pay Surplus
Austin $10 $7.50 $2.50
Brittany $9 $7.50 $1.50
Carl $8 $7.50 $0.50
Duane $7 $7.50 -$0.50
Ed $6 $7.50 -$1.50
Summary

19. Market Demand for Pizza
Highest Price Consumer
Consumer Price
Willing to Pay Surplus
Austin $10 $7.50 $2.50
Brittany $9 $7.50 $1.50
Carl $8 $7.50 $0.50
Duane $7 $7.50 -$0.50
Ed $6 $7.50 -$1.50
Summary $27 $22.50 $4.50

20. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

21. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 Austin 2 Brittany 3 Carl 4 Duane 5 Ed

22. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 2 3 4 5

23. Market Supply for Pizza
Producer
Pizza
Cost
1 $3
2 $4
3 $5
4 $6
5 $7

25. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
1 2 3 4 5

26. $10.00
$9.00
$8.00
$7.00
$6.00
$5.00 Price
$4.00
$3.00
$2.00
$1.00
$0
1 2 3 4 5

27. Market Supply for Pizza
Producer
Pizza Cost Price
Surplus
1 $3 $5 $2
2 $4 $5 $1
3 $5 $5 $0
4 $6 $5 -$1
5 $7 $5 -$2
Summary

28. Market Supply for Pizza
Producer
Pizza Cost Price
Surplus
1 $3 $5 $2
2 $4 $5 $1
3 $5 $5 $0
4 $6 $5 -$1
5 $7 $5 -$2
Summary

29. Market Supply for Pizza
Producer
Pizza Cost Price
Surplus
1 $3 $5 $2
2 $4 $5 $1
3 $5 $5 $0
4 $6 $5 -$1
5 $7 $5 -$2
Summary $12 $15 $3

30. $10
$8
$7
$5
$3
$2
$0
10,000 20,000

31. $10
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

32. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

33. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

34. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

35. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

36. $10
Supply
Government- Imposed
$8
Minimum Price
$7
$5
$3
$2
Demand
$0
10,000 20,000

37. $10
Supply
Government- Imposed
$8
Minimum Price
$7
$5
$3
$2
Demand
$0
10,000 20,000

38. $10
Supply
Government- Imposed
$8
Minimum Price
$7
$5
$3
$2
Demand
$0
10,000 20,000

39. $10
Supply
Government- Imposed
$8 A Minimum Price
$7
B E
$5
F
$3 C
$2 D
Demand
$0
10,000 20,000

40. $10
Supply
Government- Imposed
$8 A Minimum Price
$7
B E
$5
F
$3 C
$2 D
Demand
$0
10,000 20,000

41. $10
Supply
Government- Imposed
$8 A Minimum Price
$7
B E
$5
F
$3 C
$2 D
Demand
$0
10,000 20,000

42. $10
Supply
Government- Imposed
$8 A Minimum Price
$7
B E
Deadweight
$5 Loss
$25,000
F
$3 C
$2 D
Demand
$0
10,000 20,000

43. $10
$8
$7
$5
$3
$2
$0
10,000 20,000

44. $10
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

45. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

46. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

47. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

48. $10
Supply
$8
$7
$5
$3
$2
Demand
$0
10,000 20,000

49. $10
Supply
$8
$7
$5
$3 Government- Imposed
Maximum Price
$2
Demand
$0
10,000 20,000

50. $10
Supply
$8
$7
$5
$3 Government- Imposed
Maximum Price
$2
Demand
$0
10,000 20,000

51. $10
Supply
$8 A
$7
B E
$5
F
$3 C Government- Imposed
Maximum Price
$2 D
Demand
$0
10,000 20,000

52. $10
Supply
$8 A
$7
B E
$5
F
$3 C Government- Imposed
Maximum Price
$2 D
Demand
$0
10,000 20,000

53. $10
Supply
$8 A
$7
B E
$5
F
$3 C Government- Imposed
Maximum Price
$2 D
Demand
$0
10,000 20,000

54. $10
Supply
$8 A
$7
B E
Deadweight
$5 Loss
$25,000
F
$3 C Government- Imposed
Maximum Price
$2 D
Demand
$0
10,000 20,000