formulas Flashcards
allocative efficiency
value of output producers = value placed on output consumers
consumer surplus
- > consumers williness to pay - what the consumer actualy pays
- > area below demand curve and above the price
reservation price
= opportunity cost
producer surplus
- > what the seller gets - sellers cost
- > area below price and above supply curve
total surplus
- > consumer surplus + producer surplus
- > value to buyers - cost to sellers
(total surplus) market equilibrium
- > quantity supply = quantity demand
- > consumer surplus + producer surplus
total surplus maximum price
CS + PS - deadweight loss
surplus of labor
Ls - Ld= quantity of labor supplied - quantity of labor demanded
total rent of the quota to license holder
(price demanded - first price) x quantity quota + (first price - price supplied) x quantity quota
tax on the producer
Pp = P - t
-> Pp = price that the producers recieve
where P = Pc
tax on the consumer
Pc = P + t
-> Pc = price paid by consumers
where P = Pp
ad valorem tax
Pc = ( 1 + t ) Pp
tax revenue
R= Qt
average tax rate
total tax paid : total income
marginal tax rate
extra taxes paid
