lesson 8- surplus and excesses Flashcards
what is consumer surplus?
draw
the difference between what the consumer is willing to pay and the price sold to them
what is producer surplus?
draw
the difference between the market price received by the seller and the price they would of been prepared to accept
a consumer is willing to buy a packet of crisps for £2
and the seller is willing to sell it for £1.10
it sells for £1.50
what is the consumer and producer surplus?
consumer- 50p
producer- 40p
draw a supply and demand curve and label consumer surplus and producer surplus
https://www.google.com/imgres?q=consumer%20surplus%20on%20graph&imgurl=https%3A%2F%2Fd35w6hwqhdq0in.cloudfront.net%2Fa7057f8098fddcd42bf10f44741563df.jpg&imgrefurl=https%3A%2F%2Finomics.com%2Fterms%2Fconsumer-surplus-and-producer-surplus-1419678&docid=B8iKI4uSp1agLM&tbnid=PFw-e27kM8peCM&vet=12ahUKEwihs8Xt9J-JAxVvTkEAHVdZIdgQM3oECFsQAA..i&w=1014&h=883&hcb=2&ved=2ahUKEwihs8Xt9J-JAxVvTkEAHVdZIdgQM3oECFsQAA
draw excess demand on a supply and demand curve
https://www.google.com/url?sa=i&url=https%3A%2F%2Fpenpoin.com%2Fexcess-demand%2F&psig=AOvVaw1FlHWaTa1p1qnh7g-CufHp&ust=1729615545892000&source=images&cd=vfe&opi=89978449&ved=0CBQQjRxqFwoTCPCTmqr2n4kDFQAAAAAdAAAAABAE
-price is low, so more demand and less supply as more consumers are willing and able, but less profit motif
this means there is not enough supply to fulfil demand
draw excess demand on a supply and demand curve
https://www.google.com/imgres?q=excess%20supply&imgurl=http%3A%2F%2Fkwanghui.com%2Fmecon%2Fvalue%2Fmedia%2520%2520files%2Fstatic%2520graphics%2Fjpegs%2FSegment%25204%2F4_5_static_excess_supply.jpg&imgrefurl=http%3A%2F%2Fkwanghui.com%2Fmecon%2Fvalue%2FSegment%25204_5.htm&docid=L5u5eDSIKC-LRM&tbnid=CbsbbQHe4w_xBM&vet=12ahUKEwiXt_Xp9p-JAxUTQkEAHbUoO54QM3oECBcQAA..i&w=366&h=274&hcb=2&ved=2ahUKEwiXt_Xp9p-JAxUTQkEAHbUoO54QM3oECBcQAA
-as price rises, demand falls but supply increases due to profit motif
->excess stock
