10/22/20141 Consumers, Producers, and the Efficiency of Markets Chapter 7.

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Presentation transcript:

10/22/20141 Consumers, Producers, and the Efficiency of Markets Chapter 7

10/22/20142 Outline  Consumer Surplus  Producer Surplus  Market Efficiency  Conclusion: Market Efficiency and Market Failure

10/22/20143 Consumer Surplus (CS)  Willingness to pay  Using the demand curve to measure CS  How a lower price raises CS  What does CS measure?

10/22/20144 Producer Surplus (PS)  Cost and willingness to sell  Using supply curve to measure PS  How a higher price raises PS

10/22/20145 Market Efficiency  The benevolent social planner  Evaluating the market equilibrium Should there be a market in organs? Should there be a market in organs? Ticket scalping Ticket scalping

10/22/20146 Conclusion  Market efficiency  Market failure

10/22/20147