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Questions tagged [surplus]

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Assuming a fall in price, does consumer surplus fall more with elastic or inelastic price elasticity of demand

I know that the total consumer surplus is higher for more inelastic P.E.D values, which makes intuitive sense: People would be willing to pay more than they actually do for inelastic goods e.g. a ...
Hallojvjknvve's user avatar
0 votes
3 answers
158 views

How does price decrease when supply increases?

According to supply and demand, when there’s an increase in supply, resulting in a surplus, the price falls till it reaches equilibrium. But how exactly does this work? Let’s say the equilibrium is ...
Anthony Fallone's user avatar
1 vote
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Question about surplus/excess supply

My question is regarding the problem in the image above. As you can see, it says that if I have 300 tons priced at 150 dollars per ton, I should lower my price to the equilibrium price of 100 dollars ...
Anthony Fallone's user avatar
1 vote
0 answers
302 views

How can I compare surplus in monopolistic competition to surplus in monopoly?

Is there any way to compare the total surplus and consumer/producer surplus in monopolistic competition with that of perfect competition or monopoly? All I can come up with is the idea that deadweight ...
Evan's user avatar
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Consumer Surplus [closed]

Is there a case where the consumer surplus being negative does not mean that the producer surplus increases? Is it true that as consumer surplus increases, producer surplus decreases and vice versa?
DashingLikeNicole's user avatar
1 vote
2 answers
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Does cornering a market has any "bad" economic consequence?

(Not sure If this question is suited for here or it should be asked at money or law SE) As the title reads, Does any specific economic inefficiency arises when someone corners or tries to corner a ...
user2838619's user avatar
5 votes
1 answer
190 views

Derivation of Surplus in Paul Romer's paper on "mathiness"

In this paper by P. Romer https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.p20151066 I'm wondering the Surplus $S$ was derived. By using the given condition I found that $$q_0=m^{-\tfrac{1}{a+b}}N^{-\...
actuarialboi9's user avatar
2 votes
1 answer
168 views

Deadweight Loss Due to Taxes Represented on a Graph of the Market?

Let's say a market is operating at equilibrium, with MSB=MSC, and a tax is imposed on the market. This would shift the supply curve to the left and cause a deadweight loss represented by the triangle ...
johnsmith13579's user avatar
2 votes
4 answers
278 views

How can people save in a equilibrium economy?

Two people on a desert island: John produces 100kg potatoes and sells them to Paul for \$100. Paul catches 100kg fish and sells it to John for \$100. GDP is \$200\$, right? Next year, they improve ...
elemolotiv's user avatar
1 vote
2 answers
61 views

Why is the Total Current Account Balance of World positive and does it mean that the world has a net Trade Surplus?

I wondered if it was possible for all countries to have a Trade Surplus - which turns out to be impossible because the total value of imports in the world must be equal to the total value of exports ...
Mrigank Pawagi's user avatar
1 vote
0 answers
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Terminal and annual surplus distribution in participating life insurance

I consider a participating life insurance contract which is fair if $P_0 = e^{-rT} \mathbb{E}^{\mathbb{Q}}\left[ L(T) \right)$ ($\mathbb{Q}$ denotes the risk-neutral measure), where $P_0$ is the ...
Stephanie's user avatar
1 vote
1 answer
79 views

How to find the market equilibrium by surplus maximisation when there is a consumer subside?

Let's assume a market with linear demand and supply functions, let's say $Q_d = 20 - 4p$ and $Q_s = -4 +8p$ respectively. We can easily find the market equilibrium by either setting $Q_d = Q_s$ (or $...
Antonello's user avatar
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2 votes
1 answer
164 views

When to prefer maximisation of surplus and when instead to prefer minimising differences in price and q to find market equilibrium?

Two alternative approaches to compute a market equilibrium (in static analysis) are either to minimize the differences (either using abs() or a quadratic diff) between supply-demand quantities and ...
Antonello's user avatar
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0 votes
1 answer
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Difference between automated and living labor pertaining to surplus value

In the Marxist concept, animals, machines and slaves are incapable of producing surplus value. They only produce as much as they have to in order to function, and no more. Doesn't this also describe ...
IHaveNoMovieAndIMustScream's user avatar
10 votes
3 answers
4k views

Is scalping tickets harmful?

IMHO, scalping tickets is no different from legitimate arbitrage unless manipulative. Iirc, arbitrage increases surplus and hindering scalping is setting a price ceiling which leads to deadweight ...
BCLC's user avatar
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18 votes
3 answers
6k views

What does Yanis Varoufakis mean by "surplus recycling mechanism"?

Yanis Varoufakis, the current finance minister of Greece, talks about a "surplus recycling mechanism", a term he coined and uses to describe (as I understand it) a relief valve for economies running a ...
RomanSt's user avatar
  • 283
4 votes
2 answers
13k views

Difference between 'surplus' and 'welfare'

I see these two terms used interchangeably but I have the feeling they are not exactly the same. My gut feeling tells me this: 1) Surplus is the additional aggregate utility from the existence of one ...
Marten Ovaere's user avatar
6 votes
1 answer
367 views

Objections to total surplus as tool for welfare measurement

I think people would agree that the most common tool for welfare measurements in economics is the notion of total surplus. Throughout it's history, total surplus has been criticized several times ...
Martin Van der Linden's user avatar