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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
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1. Consider an individual facing a wage rate w . There's a total of 100 hours available for work or leisure in a week. (a) Represent his budget constraint graphically (b)
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