# Tag Info

Accepted

### Price discrimination- how much is optimal?

Varian has a paper on Price Discrimination and Social Welfare in which he gives some necessary and sufficient conditions for (third degree) price discrimination to increase welfare. A necessary ...
• 16.6k

### Price discrimination- how much is optimal?

Price discrimination is generally welfare ambiguous. Basic example: A monopoly can price discriminate between two market segments. In segment A, there is one consumer with a willingness to pay of $\$...
• 2,167
Accepted

### Consumer surplus in case of perfectly inelastic demand

From a purely theoretical perspective, if an individual's demand curve is perfectly inelastic, then her willingness to pay for the good is infinite. NB this also implies that she has an infinite ...
• 151
Accepted

### what is consumer surplus practically?

It is better to think of it as a "saving" rather than as a"surplus". Also, it is better understood if we imagine heterogeneous consumers for whom a threshold price exists, a "maximum willingness to ...
• 31.8k

### consumer and producer surplus

TL;DR version: "the tunnel" and D+A+B have exactly the same area. You are right to say that post-subsidy producer surplus is equal to the blue area in the following figure: However, it turns out ...
• 16.6k

• 31.8k
Accepted

### Integral solution (or a simpler) to consumer surplus - What is wrong?

Your calculation is correct. We can doublecheck your work with a graphical approach. As shown in the figure below, $CS$ at some arbitrary and not necessarily equilibrium price $p_0$ is the gray-shaded ...
• 14.4k

### Evidence that open source production processes increase efficiency and/or consumer surplus?

There is a large economic literature on intellectual property rights. However, the issue seems far from settled on what even the optimal duration for patents are. Note that open source is even a step ...
• 1,822
Accepted

### Consumer behavior with constrained demand

In a two-good space, initially the consumer maximizes $U(x,z)\;\; s.t. \;\;p_xx+p_zz =I$ and we assume it obtains the solution $(x^*, z^*)$ as a function of prices and income. In the constrained ...
• 31.8k
Accepted

### Why is consumer surplus the area under the curve?

This is quite fundamental, so I'd encourage you to look up your textbook as well... but here's a short explanation. Imagine that there are $n$ consumers in the market. You sort them by their ...
• 2,764
Accepted

### Is the consumer surplus on a Giffen/Veblen good negative?

Actually, neither demand for Veblen good nor for Giffen good is strictly increasing in price. In case of Giffen good the demand actually looks as shown below in picture 1. The reason for this is that ...
• 42.1k

### Upward sloping demand curves can’t exist!

Upward sloping demand curves are rare but they can exist for a class of a good that is called Giffen good. Upward sloping demand can exist because price of a good or service has two effects: ...
• 42.1k
Accepted

### Can consumer surplus be negative if a consumer is forced to make a purchase?

Consumer surplus is their willingness to pay minus the price they pay, and producer surplus is the price they receive minus their willingness to receive. So if you are assuming that consumers are ...
• 4,148

### Consumer behavior with constrained demand

It appears that the consumer faces an exogenous additional constraint in her optimization problem, which restricts the feasible set for the good in question, say $x$. We take this for granted: the ...
• 31.8k