Markets: Consumer and Producer Surplus- Micro Topic 2.6

Hey internet! Thank you for watching my videos. Recently a student requested a lock of my hair. Weird huh? In this episode I talk about how competitive markets allocate resources and consumer and producer surplus. I also talk about inefficiency and deadweight loss. Make sure to practice calculating CS, PS, and DWL. Let me know if you think I should give this guy my hair.

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The answers to the practice multiple-choice questions are below.
1. A
2. B
3. C

[JacobAClifford]

Do you think I should give or sell my hair? Let me know. 

The answers to the practice multiple-choice questions are below.
1. A
2. B
3. C

[takoyakilover]

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[gruugraceee]

For anyone who could not answer 2
At 3$, consumer surplus= (1/2)*base*height = (1/2) * (3-0)*6= 9 $
At new price 6$, consumer surplus = (1/2)*(6-0)*12$= 36$
Total consumer surplus (mean change in consumer surplus) = $36 - $9= 27$

So it is B

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[kells]

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...and if it were me, I’d ask for his teacher’s email so I could convey to him directly that, although sending a lock of my hair might be inappropriate, he should give this student some extra points for his above-and-beyond efforts...and for inspiring the making of this video.

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[sarah]

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[morningawesome]

consumer surplus -- difference btw what consumers are willing to pay and what they do pay (at equil). (top half of the triangle) 1/2 x base x h
e.g. Bea is willing to pay $100 for a relic, but the market equilibrium is $40 (between D and S), and therefore she pays $40. $60 is the consumer surplus.

producer surplus - difference btw the price what producers are willing to sell for (at equil). (bottom half of triangle) 1/2 x base x h
e.g. Ava wants to sell a relic for $10, but the market price is $40, and therefore she sells it for $40. The $30 is the producer surplus.

Hence total surplus would be $60 + $30 = $90.

[paqman]

Go third party. Buy from a supplier, barber shop, package it (brand it) as Mr. Cliford's Loc's., then sell it