ch6-2福利分析.pptVIP

* The material on cost, producer surplus, and the supply curve is analogous to the material earlier on WTP, consumer surplus, and the demand curve. Therefore, this section provides a bit less detail and should move a little more quickly. * Your students should be able to figure out how to get the Qs numbers in the second column of the table. * The derivation of the staircase-supply curve is analogous to that of the staircase demand curve in the earlier example. Hence, the animation is not as detailed. * For your students’ future reference, you might also note that we can use the term “marginal cost” as short-hand for “cost of the marginal seller.” * It might help to say “participating in the market” means buying and selling. It might also help to say that CS measures the net benefit to buyers: the value they get from the good is the gross benefit, minus what they pay leaves the net benefit, or CS. Similarly, PS is the net benefit to sellers. I did not put “net benefit” on this slide because it is not in the book. But if you wish, you may add it. After showing this slide in class, I show my students a short scene from the movie “Pretty Woman” as an example of these concepts. In this scene, Julia Roberts is taking a bubble bath in Richard Gere’s hotel room (don’t worry – there’s no nudity!). Gere comes into the bathroom and they negotiate a price for her to “be at his beck and call” for one week. After bargaining for a few seconds, they agree on a price of $3000. A minute later, he says he would have paid $4000 (his willingness to pay), and she says she would have accepted $2000 (her “cost”). From this, we can deduce that CS = $1000, PS = $1000, and total surplus = $2000. If this transaction did not occur, then these characters would not have received these “gains from trade.” Disclaimer: We officially urge you to consult with your institution’s legal advisor to verify that showing this brief clip in your class does not violate any copyri