consumer surplus

1
Division of Agricultural Economics ABM
2
(No Transcript)
3
Consumer Surplus

• The maximum amount that a buyer will pay for a
  good.
• It measures how much the buyer values the good or
  service.
• A buyers willingness to pay minus the amount the
  buyer actually pays.

4
Four Possible Buyers Willingness to Pay
Buyer Willingness to pay in()
Vrish 100
Arsalan 80
Ajay 70
Aijaz 50
5
The Demand Schedule and the Demand Curve
Price Buyers Quantity demanded
More than 100 None 0
80 to 100 Vrish 1
70 to 80 Vrish, Arsalan 2
50 to 70 Vrish, Arsalan, Ajay 3
50 or less Vrish, Arsalan, Ajay, Aijaz 4
6
The Demand Schedule and the Demand Curve
7
Measuring Consumer Surplus with the Demand Curve
8
Measuring Consumer Surplus with the Demand Curve
9
What Does Consumer Surplus Measure?

• Consumer surplus, the amount that buyers are
  willing to pay for a good minus the amount they
  actually pay for it, measures the benefit that
  buyers receive from a good as the buyers
  themselves perceive it.

10
Summary

• Consumer surplus equals buyers willingness to
  pay for a good minus the amount they actually pay
  for it.
• Consumer surplus measures the benefit buyers get
  from participating in a market.

11
Marketable surplus

• A marketable surplus can be the result of an
  accumulation of unsold goods or an instance of
  overproduction.
• A market surplus occurs when there is excess
  supply.

12
Continue

• Marketable surplus has lasting value that can
  be sold or used in a way that was not originally
  intended.
• It has value for someone, somewhere high
  quality can help to maintain its relevancy.

13
How to get rid of your surplus stock?

• Secondary market
• Wholesale opportunities

14
Negatives

• You can be left with lots of product that you
  cannot move.
• Additional market expenses tend to be involved as
  well.

15
(No Transcript)