Welfare Flashcards
1
Q
What is consumer surplus
A
benefit consumer get from buying something
2
Q
How to calculate CS
A
WTP - amount paid
3
Q
How to calculate PS
A
amount received by sellers - cost to seller
4
Q
How to calculate total surplus (TS)
A
TS = CS + PS
5
Q
What happen to CS if the price drops
A
it increase, customer are more happy
6
Q
what is PS (producer surplus)
A
benefit producer get by selling
7
Q
what is the conclusion of welfare
A
if one increase their surplus, the surplus of the other will decrease
