1.2.8 - consumer surpluss and producer surpluss

Question 1

The law of diminishing margninal utiltiy

Answer 1

As you consume more of a good, the margninal utility you will get from an additional unit will decrease

Question 2

Consumer surplus

Answer 2

The difference between what the consumers are willing to pay and what they actually pay

what they are willing to pay is represented by the demadn curve and what they actually pay is the equalibrium price

top triangle

Question 3

Supply curve = margninal cost curve

Answer 3

The cost of producing each extra unit which is the lowest price producers are willing to accept

Question 4

Surplus benefit

Answer 4

The differnce between what you are willing and able to pay vs how much it is actaully bought or sold for at the equilibrium

Question 5

Producer surplus

Answer 5

The difference between what the producers are willing to sell for and what they actaully sell for

Bottom triangle