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Gains From Trade

Consumer Surplus

Quantifying Welfare E ects

Producer Surplus

Welfare in Equilibrium

Equivalence Under Quasilinear Utility

What about

CS?

CS =

( v ( c 1 ) + |{ m p utility before change change c 1 ) }

( v ( c 1 ) + |{ m p c } 1 utility after change )

=

v ( c 1 )

v ( c 1 ) + p c 1

p c 1

CS = CV = EV

For a simple example illustrating CV = EV , try workout 14.7

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