Jim Whitney Economics 101

Markets and social welfare

1. Consider the diagrams below depicting Linda's demand for bittersweet hot fudge sundaes:
 
 
2. Consider what happens when Linda consumes 4 hot fudge sundaes:
 
Linda's total benefit:  TB = _________ 
minus: Linda's total expenditure:  TE = _________ 
equals: Linda's consumer surplus: CS = _________
 
3. Now consider the entire market for bittersweet hot fudge sundaes:
whitespace.gif (816 bytes)

At the equilibrium (values are in $1000s):
  Areas Value ($1000s)
For consumers:    
Total benefit (TB):     
Total expenditure (TE):     
Consumer surplus (CS):     
     
For producers:    
Total revenue (TR):     
Total cost (TC):     
Producer surplus (PS):     
     
For consumers and producers combined:
Total market surplus: