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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
If the quantity demanded of Pepsi Cola goes up, and its supply enhances what will occur in the market for Pepsi?
how can we bring in the marginal propensity to consume
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