(BTY)+Chapter+7

 =Consumers, Producers, and the Efficiency of Markets =  = =

Welfare economics
**Welfare economics**: distribution of resources in order to determine economic wellbeing.   
 * buyers and sellers receive benefits from receiving benefits from part of the market
 * the equilibrium in price and quantity in the market bring the total welfare of consumers and producers to max point.

**Consumer Surplus **
<span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">**Willingness to pay**: the amount of money that the buyer is willing to pay for a product <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;">
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Willingness to pay determines the amount of how much the buyer values the product.
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Consumer Surplus: The amount of money that the buyer gets from the amount of money that the buyer paid compared to his willingness to pay.

<span style="color: rgb(251, 243, 121);"><span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Using Demand Curve to Measure Consumer Surplus
<span style="color: rgb(251, 243, 121);"><span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;"> <span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">The area of consumer surplus: <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;">
 * <span style="font-family: Tahoma,Geneva,sans-serif;">consumer surplus is directly related to demand curve on a certain product.
 * <span style="font-family: Tahoma,Geneva,sans-serif;">the market demand curve portrays many types of quantities which buyers are able to pay for at different prices in their willingness to pay.
 * <span style="font-family: Tahoma,Geneva,sans-serif;"><span style="color: rgb(233, 253, 63);">**consumer surplus** measures the profit that the buyers get from a product that the buyers identify.
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Rational people, in other words, normal people do anything in order to get anything when they are given opportunity.
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">consumer surplus reproduce on economic wellbeing.

**<span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif; color: rgb(62, 3, 186);">Producer Surplus **
<span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;">
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Producer surplus: the money that the seller is paid for, compare to its actual cost.
 * <span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">the accounting profit
 * <span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">price per unit
 * <span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">cost per unit (total cost)
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">measures any extra benefits that the sellers receive from the market.

<span style="color: rgb(238, 231, 73);"><span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Using Supply Curve to Measure Producer Surplus
<span style="color: rgb(238, 231, 73);"><span style="font-family: 맑은 고딕;"> <span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">Producer Surplus’s area <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;">
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Producer surplus is directly related to supply curve

<span style="color: rgb(7, 6, 198);">

<span style="color: rgb(7, 6, 198);">**<span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Market Efficiency **
<span style="font-family: 맑은 고딕;">
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Consumer Surplus:
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Value to buyers – Amount paid by buyers
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Producer Surplus:
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Amount received by sellers – cost to sellers
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Total surplus:
 * <span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">Consumer surplus + Producer surplus
 * <span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif;">Value to buyers – cost to sellers

<span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;"> business.learnhub.com <span style="font-family: 맑은 고딕;">

**<span style="font-family: 맑은 고딕;"><span style="font-family: Tahoma,Geneva,sans-serif; color: rgb(242, 13, 13);">Evaluating Market Equilibrium **
<span style="font-family: Tahoma,Geneva,sans-serif;"><span style="font-family: 맑은 고딕;">-Three insights about Market outcomes: <span style="font-family: 맑은 고딕;">1. Free Market distribute supply to the people who needs the product the most. This is determined by buyer’s willingness to pay <span style="font-family: 맑은 고딕;">2. Free Market distribute the demand of a product to the people who can make them with the most small amount of cost <span style="font-family: 맑은 고딕;">3. Free Market determines the highest point of quantity, producer surplus + consumer surplus <span style="font-family: 맑은 고딕;"> <span style="font-family: 맑은 고딕;">When the planner can leave the market outcome, that means that the equilibrium outcome is efficient. This is explained by French word, Laissez faire, which means “allow them to do”

media type="youtube" key="aDWvtA6D5DU" height="344" width="425" <span style="font-family: 맑은 고딕;"> Questions& Answers