Supplementary Notes for Topic 3: The Price Mechanism - Market Efficiency

Benefit: what you are willing to give up to get something

Marginal benefit: what you are willing to give up to get one additional unit of something

Cost: what you must give up to get something

Marginal cost: what you must give up to get one additional unit of something

Price
Market title
80 S = MC

A
40
B
D = MB
C

Quantity
3
Where is:

Equilibrium quantity Equilibrium price

Consumer surplus Producer surplus
Total surplus Total benefit
Total expenditure Total revenue
Total production cost