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Consumer Surplus
-Difference between maximum amounts a consumer is wishing to pay for a good and amount actually paid.
The stepladder demand curve is converted into a straight line demand curve by making the units of good smaller. Combining consumer surplus with aggregate profits which producers obtain we can evaluate:
1) Benefits and Costs of different market structures
2) Public policies which changes the behavior of consumers and firms
Cost in the Long Run Cost minimization with the Varying Output Levels -A firm's expansion path shows minimum cost combinations of labor and capital at each level of output.
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how can we bring in the marginal propensity to consume
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