1、R. GLENNHUBBARDANTHONY PATRICKOBRIENFIFTH EDITION 2015 Pearson Education, Inc.2 2015 Pearson Education, Inc.Chapter Outline andLearning Objectives4.1 Consumer Surplus and Producer Surplus4.2 The Efficiency of Competitive Markets4.3 Government Intervention in the Market: Price Floors and Price Ceilin
2、gs4.4 The Economic Impact of TaxesAppendix: Quantitative Demand and Supply AnalysisCHAPTER4 Economic Efficiency, Government Price Setting, and Taxes3 2015 Pearson Education, Inc.Should the Government Control Apartment Rents?Rent control puts a legal limit on the rent that landlords can charge for an
3、 apartment.Since rent-controlled rents are usually far below market rents, it seems clear that this doesnt make landlords better off.Does it make tenants better off?Would you prefer to look for an apartment in a city with or without rent control?LEARNING OBJECTIVE4 2015 Pearson Education, Inc.Consum
4、er Surplus and Producer Surplus4.1Distinguish between the concepts of consumer surplus and producer surplus.5 2015 Pearson Education, Inc.Consumer and Producer SurplusSurplus (noun): Something that remainsabove what is used or neededEconomists use the idea of “surplus” to refer to the benefit that p
5、eople derive from engaging in market transactions.Consumer surplus is the difference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer receives.Producer surplus is the difference between the lowest price a firm would be willing to accept f
6、or a good or service and the price it actually receives.6 2015 Pearson Education, Inc.Deriving the Demand Curve for Chai TeaSuppose four people are each interested in buying a cup of chai tea.We can characterize them by the highest price they are willing to pay.At prices above $6, no chai tea will b
7、e sold.At $6, one cup will be sold, etc.Deriving the demand curve for chai teaFigure 4.17 2015 Pearson Education, Inc.How Much Benefit Will Chai Tea Drinkers Receive?How much benefit do the potential tea consumers derive from this market?That depends on the price and their marginal benefit, the addi
8、tional benefit to a consumer from consuming one more unit of a good or service.If the price is low, many of the consumers benefit.If the price is high, few (if any) of the consumers benefit.Deriving the demand curve for chai teaFigure 4.18 2015 Pearson Education, Inc.Consumer Surplus at a Price of $
9、3.50If the price of tea is $3.50 per cup, Theresa, Tom, and Terri will buy a cup.Theresa was willing to pay $6.00; a cup of chai tea is “worth” $6.00 to her. She got it for $3.50, so she derives a net benefit of$6.00 $3.50 = $2.50.Area A represents this net benefit, and is known as Theresas consumer
10、 surplus in the chai tea market.Measuring consumer surplusFigure 4.2a9 2015 Pearson Education, Inc.Consumer Surplus at a Price of $3.50continuedTom and Terri also obtain consumer surplus, equal to $1.50 (area B) and $0.50 (area C).The sum of the areas of rectangles A, B, and C is called the consumer
11、 surplus in the chai tea market.This area can be described as the area below the demand curve, above the price that consumers pay. Measuring consumer surplusFigure 4.2a10 2015 Pearson Education, Inc.Consumer Surplus If Price Falls to $3.00If the price falls to $3.00, Theresa, Tom, and Terri each gain an additional $0.50 of consumer surplus.Tim is indifferent between buying the cup or not; his well-being is the same either way.The overall consumer surplus remains the area below the demand curve, above the (new) price.Measuring consumer surplusFigure 4.2b
