T5 - consumer and producer surplus Flashcards
What is paerto optimality
where no further improvements to society’s well being can be made through a reallocation of resources that makes at least one person better off without making someone else worse off.
what is consumer surplus
difference between the price consuemrs are willing to pay and the oen they have to pay
what is producer suprlus
difference between the price charged by the firm and the oen they actually are prepared too
how to calculate consumer suprlus
area above the traingle made by market price and q1
What happens when an industry is monopolised
cosnumer surplus falls as price rise
what is the deadweight lsoss area
the reuction in consumer and producer surplus when oiutput is restrtced to less than the optimium leevel
what does it mean if price is inelastic
big consumer surplus
