Week 6 - Consumer and Producer Surplus

Question 1

What is surplus?

Answer 1

What the consumer is willing to pay (or producer willing to sell) vs what the consumer actually paid (or producer sold)

Question 2

If given the rate of change of the demand function, how do you find the demand funtion?

Answer 2

Take the integral of the rate of change

Question 3

Given a supply and demand function, how do you calculate the consumer surplus?

Answer 3

integral of the demand function minus the equilibrium price (determined by setting supply and demand functions equal to each other)

Question 4

Given a supply and demand function, how do you calculate the producter surplus?

Answer 4

integral of the equilibrium price (determined by setting supply and demand functions equal to each other) minus the supply function