Consumer and Producer Surplus and Interrelated markets Flashcards
What is Consumer surplus?
Difference between what the consumer pays and what they would have been willing to pay.
What is Producer Surplus?
Difference between the price a firm receives and the price it would be willing to sell at
Read the Consumer and Producer Surplus graph on Microeconomics Diagram Folder
Read
What will an increase in demand or supply mean for consumer and producer surplus?
Larger producer and consumer surplus
What is total welfare?
Consumer Surplus + Producer Surplus
What is joint demand?
Goods are consumed together
What is Competitive demand?
Subsitute goods
What is Composite demand?
Where a good/service have more than one use (increase in demand for X will cause a decrease in supply for Y)
What is Derived demand?
Where the demand for one good requires another good to make it, causing demand for that good to change
