1.2.8 CS And PS Flashcards
What does the demand curve also tell you about as well as the price and quantity demanded ?
The marginal benefit (curve)
The most consumers are willing to pay is equal to ?
The marginal benefit
What is marginal benefit ?
It is the additional benefit consumers gain from consuming an extra unit of a good
What does the law of diminishing marginal utility mean ?
It is the decreasing additional benefit.
As you consumer more of a good, the marginal utility you gain from an extra unit will go down.
What is total utility?
It is the total benefit from consuming all units of a g/s
What happens to marginal utility and total utility every time we consume one extra unit of a g/s ?
Marginal utility will decrease whilst total utility will increase.
What is consumer surplus ?
It is the difference between what consumers are willing to pay and what they actually pay.
What does the supply curve equal to ?
The marginal cost curve.
What is the lowest price suppliers willing to sell for equal to ?
The marginal cost.
What is the marginal cost ?
It is the cost of producing each extra unit.
What is producer surplus ?
It is the difference between what producers are willing to sell for and what they actually sell for
How to draw consumer surplus ?
Below the demand curve and above the equilibrium price.
How to draw the producer surplus ?
Above the supply curve and below the equilibrium price.
