Producer/Consumer surplus

lucyhacking
Mind Map by lucyhacking, updated more than 1 year ago
lucyhacking
Created by lucyhacking over 6 years ago
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A Levels Economics (Microeconomics) Mind Map on Producer/Consumer surplus, created by lucyhacking on 11/25/2013.
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Producer/Consumer surplus
1 Producer surplus: The difference between the price a producer is willing to accept and what is actually paid
1.1 A fall in price reduces producer surplus, rise in price increases producer surplus
1.2 Total revenue= P1xQ1
2 A change in producer surplus
3 caused by an improvement in production technology or a fall in the cost of raw materials and components used in the production of a good or service
4 Factors affecting supply: coat of production, size +nature of the industry
5 Increase in supply: technological advance, reduction in th rate of indirect taxation
6 Consumer surplus: Extra amount that a consumer is willing to pay for a product above the price that is actually paid
6.1 A fall in price results to an increase in consumer surplus
7 Factors affecting demand
7.1 Consumer income
7.1.1 Real disposable income
7.1.2 Normal goods: income increases, demand increases
7.1.3 Inferior goods: Income increases, demand decreases
7.2 Price of other products
7.2.1 Substitutes: Competing goods
7.2.2 Complements: Goods for which there's joint demand
7.3 Tastes+Fashion
7.3.1 Producers only advertise if they believe it has positive effect on demand
8 Decrease in supply: less of a product being supplied at the same price, increase in the rate of indirect taxation
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