This document provides an overview of consumer surplus, including its definition, measurement, and applications. Consumer surplus is defined as the difference between the maximum price consumers are willing to pay for a good and the actual market price they pay. It can be measured as the area below the demand curve and above the market price. While consumer surplus generally declines with consumption due to diminishing marginal utility, it provides a measure of economic welfare. The concept of consumer surplus has practical applications in international trade, business pricing strategies, and public policy decisions.
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Tonmoy Halder
Shopna Akter
Bipul Chandra
Mamunur Rahaman
Siam Hossain
Jibon Rahman
A PowerPoint Presentation about Indifference Curve of Economics. Everyone should know about Indifference Curve. So watch it, download it and make your own from it.
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Tonmoy Halder
Shopna Akter
Bipul Chandra
Mamunur Rahaman
Siam Hossain
Jibon Rahman
A PowerPoint Presentation about Indifference Curve of Economics. Everyone should know about Indifference Curve. So watch it, download it and make your own from it.
Economics, Law of Demand, Determinants of Demand, increase and Decrease in Demand, Extension and Contraction in Demand, Exception of Demand, Assumptions of Demand
An indifference curve shows combinations of goods and services between which a consumer is indifferent
In other words, each combination on an indifference curve gives the consumer the same total satisfaction
An indifference curve is normally drawn as convex to the origin
This reflects the assumption of the law of diminishing marginal satisfaction / marginal utility
I.e. as we consume extra units of something, the extra utility falls, total utility rises at a diminishing rate
Combinations of products on an indifference curve further from the origin are assumed to give greater total utility
Economics, Law of Demand, Determinants of Demand, increase and Decrease in Demand, Extension and Contraction in Demand, Exception of Demand, Assumptions of Demand
An indifference curve shows combinations of goods and services between which a consumer is indifferent
In other words, each combination on an indifference curve gives the consumer the same total satisfaction
An indifference curve is normally drawn as convex to the origin
This reflects the assumption of the law of diminishing marginal satisfaction / marginal utility
I.e. as we consume extra units of something, the extra utility falls, total utility rises at a diminishing rate
Combinations of products on an indifference curve further from the origin are assumed to give greater total utility
It is a stream of social sciences and commerce.
It is a study of production, consumption, distribution and regulation of flow of goods and services in an economy.
It has a direct relation with money.
It studies the economic aspect of goods and services provided in the economy.
It is a wider concept and hence affects the overall conditions of the economy.
It has two major segments: micro and macro. It is derived from Greek word ‘Mikros’.
It creates efficiency and smoothens up the process of final consumption of goods and services.
It tries to understand the problems that occur while producing, distributing and consuming a product.
It deepens our understanding.
Consumption is a broader term and it is the essence of economics. Economists generally consider consumption to be the final purpose of economic activity, hence consumption per person is a central measure of an economy’s productive success.
Consumption in economics means utilization of a product or a commodity and to derive benefits from the same. The utility of a product will help us in satisfying our needs and hence it is consumption.
Consumption can be defined in different ways, but is usually best described as the final purchase of goods and services by individuals. The purchase of a new pair of shoes, a burger at the fast food restaurant, or the service of getting your house cleaned are all examples of consumption.
It is a state of maximum satisfaction from a consumption.
A producer will obtain the stage of equilibrium when he will get maximum profit from his production.
In economics, economic equilibrium is a state where economic forces such as supply and demand are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change.
Equilibrium occurs at the point at which quantity demanded and quantity supplied are equal. Market equilibrium in this case refers to a condition where a market price is established through competition.
This price is often called the competitive price or market clearing price and will tend not to change unless demand or supply changes and the quantity is called "competitive quantity" or market clearing quantity.
The presentation is aimed at providing basic understanding of the housing policies in the country, under standing its chronological evolution, the different policies its composition with respect to the eligibility and amenities.
Impacts of Density, Built Up & Floor Area on the Living conditions of a SlumDhanya Pravin
The term paper studies the Impacts of Density, Built Up & Floor Area on the Living conditions of a Slum in Coimbatore, India. The parameters of density, built up area, floor area and its ratio along with the density greatly influence a morphology of any subsystem. The study attempts to look into these influences that the parameters create on a slum subsystem as these parameters affect the living conditions, its quality of living, demand for a particular area, the domain of people the area includes and ultimately the city as a fabric.
A descriptive summary of the bare act of 2016 with a town planning perspective. The presentation take a look at the structure of the act with its section & sub sections.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
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1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
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when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
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how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
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The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
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2. Table of Contents
INTRODUCTION
o MICROECONOMICS
o ECONOMIC WELFARE
o CONSUMER SURPLUS
o PRODUCER SURPLUS
THEORY & CONCEPTS
o DEFINITION
o MEASURING CONSUMER SURPLUS
o DECLINING CONSUMER SURPLUS
o REASONS FOR SURPLUS
ASSUMPTIONS & CRITIQUES TO THE THEORY
APPLICATION
3. Introduction: Understanding the Terminologies
Microeconomics
The prefix micro means small, indicating that microeconomics is concerned with the study of the market
system on a small scale. Microeconomics looks at the individual markets that make up the market system
and is concerned with the choices made by small economic units such as individual consumers, individual
firms, or individual government agencies.
Economic welfare
Economic welfareis the total benefit available to society from an economic transaction or situation. It is also
called community surplus. In market analysis economic welfare at equilibrium can be calculated by adding
consumer and producer surplus.
Consumer surplus
Consumer surplus or consumers' surplus is the monetary gain obtained by consumers because they are
able to purchase a product for a price that is less than the highest price that they would be willing to pay.
Producer surplus
Producer surplus or producers' surplus is the amount that producers benefit by selling at a market price
that is higher than the least that they would be willing to sell for.
4. Theory & Concepts
Consumer Surplus is a measure of the economic welfare that people gain from purchasing and then
consuming goods and services.
The difference between the maximum price that consumers are willing to pay for a good and the market
price that they actually pay for a good is referred to as the consumer surplus.
Definition of Consumer Surplus
Regarding this Prof. Marshall has said that “The excess of price which he (consumer) would be willing to
pay rather than go without. The thing over that which he actually does pay, is the economic measure of this
surplus satisfaction. It may be called “Consumer’s Surplus”.
According to Penson – “The difference between what we would pay and what we have to pay is called
Consumer’s Surplus.”
According to Prof. J. K. Mehta – “Consumer’s Surplus obtained by a person from a commodity is the
difference between satisfaction which he derives from it and which he foregoes in order to procure that
commodity.”
As per Samuelson – “There is always a gap between total welfare and total economic value. This gap is the
nature of a surplus which consumer gets because he always receives more than he pays.”
Measuring Consumer Surplus
The demand curve is a graphic representation used to
calculate consumer surplus. It shows the relationship between
the price of a product and the quantity of the product
demanded at that price, with price drawn on the y-axis of the
graph and quantity demanded drawn on the x-axis. Because of
the law of diminishing marginal utility, the demand curve is
downward sloping. The determination of consumer surplus is
illustrated in Figure, which depicts the market demand curve
for some good. Example: The market price is $5, and the
equilibrium quantity demanded is 5 units of the good. The
market demand curve reveals that consumers are willing to
pay at least $9 for the first unit of the good, $8 for the second
unit, $7 for the third unit, and $6 for the fourth unit.
However, they can purchase 5 units of the good for just $5 per unit. Their surplus from the first unit
purchased is therefore $9 ‐ $5 = $4. Similarly, their surpluses from the second, third, and fourth units
5. purchased are $3, $2, and $1, respectively. These surpluses are illustrated by the vertical bars drawn in
Figure. The sum total of these surpluses is the consumer surplus:
$4 +$3 +$2 +$1 = $10
The value $10, however, is only a crude approximation of the true consumer surplus in this example.
The true consumer surplus is given by the area below the market demand curve and above the market
price.
This area consists of a triangle with base of length 5 and height of length 5. Applying the rule for the area of
a triangle—one half the base multiplied by height—one finds that the value of the consumer surplus in this
example is actually 12.5.
Declining Consumer Surplus
Consumer surplus generally declines with consumption. One explanation for this is the law of diminishing
marginal utility, which suggests that the first unit of a good or service consumed generates much greater
utility than the second, which generates greater utility than the third and subsequent units.
Example: A very thirsty consumer will be prepared to pay a relatively high price for their first soft drink, but,
as they drink more, less utility is derived and the price they would be prepared to pay falls. Therefore, as
consumption rises to reach the equilibrium price, marginal utility falls. As utility falls, the price that
consumers are prepared to pay declines, causing the demand curve to slope down.
Reasons for Surplus
A surplus occurs when there is some sort of disconnect between supply and demand for a product, or when
some people are willing to pay more for a product than others. For example, if there were a set price for the
product, and everyone expected to pay the same amount, surplus and shortage would be non-existent.
This doesn't tend to happen in the real world, however, because various people and businesses have
different thresholds of price, both when buying and when selling. When selling goods, it is a constant
competition to produce the best and the most, at the best value. As prices rise and fall based on supply and
demand, surplus is created on the producer end and the consumer end, respectively. If demand for the
product is high, the vendor offering the lowest price may run out of supply. This often results in an increase
in general market price (producer surplus). The opposite is also true: prices tend to go down when supply is
high but there is not enough demand (consumer surplus). One common cause of surplus is that the cost of
a product is initially set too high, and nobody is willing to pay that price.
6. Assumptions & Critiques to the Theory
Assumptions to the theory
Prof. Marshall has discussed the concept of Consumer’s Surplus on the basis of the following assumptions:
•Marginal Utility of Money is Constant: The marginal utility of money to the consumer remains constant.
It is so when the money spent on purchasing the commodity is only a small fraction of this total income.
•No Close Substitutes Available: The commodity in question has no close substitutes and if it does have
any substitute, the same may be regarded as an identical commodity and thus only one demand should
may be prepared.
•Utility can be measured: The utility is capable of cardinal measurement through the measuring rod of
money. Moreover, the utility obtainable fromone good is absolutely independent of the utility from the
other goods. No goods affect the utility that can be derived from the other goods.
•Tastes and Incomes are same: That all people are of identical tastes, fashions and their incomes also are
the same.
Critiques to the Theory
The concept of Consumer’s Surplus has been criticised on several grounds:
•This Concept is Imaginary: The concept is complete imaginary, illogical and illusory. You just imagine,
what you are prepared to pay and you proceed to deduct from that what you actually pay. It is all
hypothetical. One may say that one is prepared to pay anything. Hence it is unreal.
•Measurement of this Concept is Difficult: The critics of this concept allege that measurement of
Consumer’s Surplus is difficult. It is because utility is a subjective concept and will vary from person to
person. Total utility is impossible to measure because when we consume more units it is said that the
marginal utility of even earlier units start diminishing.
•This Concept is not Applicable to Substitutes: The concept may not apply in case of goods which have
substitutes. Why should on imagine how much will be willing to pay for a commodity. One finds it hard to
think that the substitute of a commodity has no significant effect on the surplus satisfaction he derives from
the commodity. Decidedly, the consumer will feel more satisfied if two good substitutes as well as
complements are made available to him than in case he gets only one of the two at a time. The consumer
can properly appreciate the utility from a pen only when the same is accompanied by ink.
7. •This Concept is not Applicable to Necessaries: The idea of Consumer’s Surplus does not apply to the
necessaries of life or conventional necessaries. In such cases the surplus is immeasurable. What would not a
man be prepared to pay for a glass of water when he is dying of thirst?
•The Complete List of Demand and Price not Available to Consumer: Another ground on which the
concept has been criticized is that the complete and reliable list of demand and prices is never availableto
the consumer. The demand schedule according to which he regulates and decides his purchases is not
necessary to come true in practice. How much the consumer would be willing to pay rather than go without
the thing is something hard to answer correctly.
Application
Economists are of this opinion that the actual measurement of Consumer’s Surplus is a difficult task as
utility being purely a psychological concept, yet the concept has a great practical importance.
•Comparison of Gains from the International Trade: Consumer’s Surplus from international transactions
enables us to compare the relative gains from the international trade of the different countries. For
example—wecan import things cheaply from abroad, but before importing, we were paying more for
similar home produced goods. The imports, therefore yield a surplus satisfaction. This is Consumer’s
Surplus. The larger this surplus, the more beneficial is the international trade.
•Useful to Businessman and Monopolist: It is of practical importance to the monopolist and businessman
in fixing the price of his commodity. If the commodity is such that the consumers are willing to pay more
for it, they will enjoy large surplus. Thus, the monopolist and businessman is guided by the knowledge of
the Consumer’s Surplus in fixing the price of his product.
•Importance in Public Finance: The concept has a great practical importanceto the Government in
determining the desirability of imposing tax on certain commodity. A tax imposed on a commodity tends to
raise its price and to reduce Consumer’s Surplus thereby, but it yields some revenue to the government.
•Importance in Welfare Economics: This concept is an important tool in welfare economics also. This can
be explained in the following manner:
(i) In his partial analysis, Marshall deals with the surplus of all the consumers in a market.
(ii) Next, the effects of price-quantity variations of commodities on the welfare of the commodity
are also being worked out with the aid of this concept.
(iii) Further, the gain which accrues to the community from a new product and the loss from the
total dis-appearance of a product from the market are some of the other problems which are
being explained with the idea of Consumer Surplus.
(iv) In the end, the effects of a tax and a subsidy on total welfare can be explainedby it.
References
http://www.investopedia.com/terms/b/benchmark-surplus.asp