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Lecture Comments (22)

2 answers

Last reply by: Professor Jibin Park
Mon Oct 3, 2016 7:30 PM

Post by Tiffany Liao on September 25 at 12:13:26 AM

Hi Mr. Park,
Why is it that the consumer surplus is the area ABOVE the equilibrium point? If people were to be paying the higher price above equilibrium, wouldn't they be less happy rather than extra happy?

1 answer

Last reply by: Professor Jibin Park
Fri Feb 6, 2015 10:15 AM

Post by Siyun Liu on February 5, 2015

In "how does a tax affect hotel owners?" part, why isn't the lower bound of the rectangular box the equilibrium price before tax? Thanks

0 answers

Post by Rebecca Dai on October 28, 2014

And also, can you give out some practice problem set for each class so that we are able to review and reinforce the understanding and application?

1 answer

Last reply by: Professor Jibin Park
Tue Oct 28, 2014 4:38 PM

Post by Rebecca Dai on October 28, 2014

When you were talking about exporting countries, you mentioned the quantity exported. Is it right that the surplus is kinda like actually exported and shortage is imported?

1 answer

Last reply by: Professor Jibin Park
Tue Oct 28, 2014 4:22 PM

Post by Rebecca Dai on October 28, 2014

Mr. Park. I think I have asked this question before but you didn't answer. How can I find free source of past AP exam papers? Could you give them to to if you have them or the sources? Thank you very much!

5 answers

Last reply by: Professor Jibin Park
Sun Oct 26, 2014 8:04 PM

Post by Rebecca Dai on October 23, 2014

In "how does a tax affect hotel owners?" part, shouldn't the PS2 be higher and intersect with S2? And I don't totally understand what the area on the graph that represent cs and ps mean. What is the meaning of those area? What do they represent cs and ps? What is the increase on the graph the increase of tax revenue?

1 answer

Last reply by: Professor Jibin Park
Sun Sep 14, 2014 5:50 PM

Post by Eugene Song on September 14, 2014

Example IV
Total surplus without tariff is A+B+C+D+E+F
Total surplus with tariff is A+B+C+D+E
Therefore, deadweight loss is F not the two triangles.
Would you clarify this?

Thanks

0 answers

Post by Professor Jibin Park on January 30, 2014

I didn't draw supply shift to the left, but that's what WOULD happen if you add an excise tax on the supplier.

Basically, the whole point is to show that taxes are going to essentially be the same whether you put the tax on the supplier or the consumer. E2 would be the equilibrium point assuming the tax on the supplier instead.

1 answer

Last reply by: Professor Jibin Park
Thu Jan 30, 2014 11:56 AM

Post by Jessie Xiao on January 30, 2014

Why is E2 point in 22'17" not an intersection of supply and demmand curve?

Total Surplus, Deadweight Loss & World Trade

  • Consumer surplus is the extra benefit individuals receive when they make a purchase.
  • The consumer surplus on a supply and demand graph is above the equilibrium price but below the demand curve.
  • Producer surplus is the extra benefit individuals receive when they make a sale.
  • The producer surplus on a supply and demand graph is below the equilibrium price but above the supply curve.
  • Taxes create deadweight loss or the area of total surplus (CS + PS) that is lost as a result of a tax.
  • In a state of autarky, there is no trade.
  • Trade benefits both trading partners. However, there are some winners and losers with trade.
  • Total surplus is increased when trade occurs but distributed differently depending on if it’s the importing or exporting country.

Total Surplus, Deadweight Loss & World Trade

Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.

  • Intro 0:00
  • Lesson Overview 0:16
  • II. Product Markets 1:25
  • What is Consumer Surplus? 2:32
    • Definition of Consumer Surplus
    • Supply and Demand Graph
  • What is Producer Surplus? 5:20
    • Definition of Producer Surplus
    • Supply and Demand Graph
  • CS + PS 8:52
  • Example 1 10:17
  • Example 2 12:21
  • How Does a Tax Affect Hotel Owners? 14:19
    • Excise Tax on Hotel Owners
    • Equilibrium Price
    • Excise Tax on Hotel Guests
    • Equilibrium Price
    • Tax Incidence
  • Example 3 22:36
  • International Trade 26:03
    • Autarky
  • Importing Countries 28:21
    • World Price
    • Positive Net Gain
  • Exporting Countries 32:28
    • World Price
    • Positive Net Gain
  • Example 4 37:46