#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
is there some reasonable measure we can apply to the outcome of a competitive market that enables us to say whether that outcome is socially desirable? Economists have developed two related concepts called
consumer surplus and
producer surplus to address that question. We will begin with consumer surplus, which is a measure of how much net benefit buyers enjoy from the ability to participate in a particular market.
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3.9. Consumer Surplus—Value minus Expenditure crucial to have a sense of why we might care whether the market tends toward equilibrium. This question moves us into the normative, or evaluative, consideration of whether market equilibrium is desirable in any social sense. In other words, <span>is there some reasonable measure we can apply to the outcome of a competitive market that enables us to say whether that outcome is socially desirable? Economists have developed two related concepts called consumer surplus and producer surplus to address that question. We will begin with consumer surplus, which is a measure of how much net benefit buyers enjoy from the ability to participate in a particular market.
To get an intuitive feel for this concept, consider the last thing you purchased. Maybe it was a cup of coffee, a new pair of shoes, or a new car. Whatever it was, think of Summary
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