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Evaluating the Gains and Losses from the Policies of Government: Consumer and Producer Surplus
* Review
- Consumer surplus is total benefit or value which consumers receive beyond what they pay for good.
- Producer surplus is total benefit or revenue which producers receive beyond what it cost to produce a good.
* To determine welfare effect of a governmental policy we can measure gain or loss in consumer and producer surplus.
* Welfare Effects
- Gains and losses because of government intervention in the market.
Briefly explain the main macroeconomic objectives of governments. Definition of macroeconomic issues Growth a) Enhance in national income per unit of time, a
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solution for -calculate price elasticity of demand for demand function Q= 10 - 2p for decrease in price from Rs. 3 to Rs.2
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