Consumer and producer surplus, Microeconomics

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Evaluating the Gains and Losses from the Policies of Government: Consumer and Producer Surplus

* Review

- Consumer surplus is total benefit or value which consumers receive beyond what they pay for good.

- Producer surplus is total benefit or revenue which producers receive beyond what it cost to produce a good.

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* To determine welfare effect of a governmental policy we can measure gain or loss in consumer and producer surplus.

* Welfare Effects

- Gains and losses because of government intervention in the market.

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