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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 willingness to pay from high to low. So the first consumer is willing to pay very high, and so on. Let's say the willingness to pay (sorted) is 12, 10, 9, 7, 5, 4, 2. ...

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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 forced to buy at a price of 100, yes the consumer surplus is negative. and according to your example, the producer surplus will be zero. You are right it does not ...

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Tax is payed by the party it’s levied on, but I think your question is about tax burden and loss of consumer/producer surplus. In this case both producers and consumers loose the same amount of their surplus, as you can calculate the lost area which is for both of them 40. However, in real life this does not have to be symmetric. It depends on the ...

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First of all, there is no need to believe any economic dogma. The real world is usually more complicated than these stories. If anyone can convince me of something with a two minute anecdote, that was probably not an important aspect of my world view, and I should probably not engage in setting such policy. (E.g. via voting for the person who tells the same ...

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Utility is not the same as consumer surplus. Consumer surplus is the difference between price an individuals pay and their individual reservation price. Utility is a measure of gratification that can be completely different from consumer surplus and depending on what kind of utility we are talking about it might not even be possible to assign integer value ...

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Beyond Art's good and didactic answer you may find the following paper interesting: Using Big Data to Estimate Consumer Surplus: The Case of Uber. It gives a real and concrete example of how to define a consumer surplus. Using almost 50 million individual-level observations [...], we estimate that in 2015 the UberX service generated about \\$2....

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