Chapter 4 Flashcards
1
Q
How do you find individual consumer surplus
A
willingnes to pay - price
2
Q
What will be the individuls consumer surplus if the willingness to pay is less than the price
A
it will be zero
3
Q
How do you find tola consumersurplus
A
add up all the consumer surplus
4
Q
How do you find the consumer surplus on the grah
A
Use the formula for the area of the triganle(1/2b*h)
Note: b is the number in the x-axis
h is the willgness to pay - price
5
Q
How do you find producer surplus
A
price - cost
6
Q
If the price is less than the cost to make the product will the producers sell it?
A
No
7
Q
How do we find the producer surplus using the supply curve on the graph
A
1/b * base*height
height is (price-cost)
8
Q
How do you find the total surplus?
A
By adding the producer surplus with Consumer surplus
