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Total Surplus
#cfa #cfa-level-1 #economics #has-images #microeconomics #reading-13-demand-and-supply-analysis-introduction
The following figure shows that a competitive market creates an efficient allocation of resources at equilibrium.
- In equilibrium, the quantity demanded equals the quantity supplied.
- At the equilibrium quantity, marginal benefit equals marginal cost, so the quantity is the efficient quantity.
- The sum of consumer and producer surplus is maximized at this efficient level of output. It is here that all potential gains from production and exchange are realized.
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Subject 5. Consumer Surplus, Producer Surplus, and Total Surplus
Producer surplus is not the same as profit. Remember that profit is the return that accrues to owners of a firm and is the difference between sales revenue and total (not marginal) costs of production. <span>Total Surplus The following figure shows that a competitive market creates an efficient allocation of resources at equilibrium. In equilibrium, the quantity demanded equals the quantity supplied. At the equilibrium quantity, marginal benefit equals marginal cost, so the quantity is the efficient quantity. The sum of consumer and producer surplus is maximized at this efficient level of output. It is here that all potential gains from production and exchange are realized. <span><body><html>
Subject 5. Consumer Surplus, Producer Surplus, and Total Surplus
Producer surplus is not the same as profit. Remember that profit is the return that accrues to owners of a firm and is the difference between sales revenue and total (not marginal) costs of production. <span>Total Surplus The following figure shows that a competitive market creates an efficient allocation of resources at equilibrium. In equilibrium, the quantity demanded equals the quantity supplied. At the equilibrium quantity, marginal benefit equals marginal cost, so the quantity is the efficient quantity. The sum of consumer and producer surplus is maximized at this efficient level of output. It is here that all potential gains from production and exchange are realized. <span><body><html>
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