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Gains From Trade

Consumer Surplus

Quantifying Welfare E ects

Producer Surplus

Welfare in Equilibrium

Gains From Trade

(Net) Gains from rade = gross benefit

expenditures

in other words, net gain is v(n)

pn

R e s e r v a t i o n P r i c e C u r v e f o r ( $ ) R e s . R e s e r v a t i o n p r i c e

Values

r1 r r3 2

r r5 r6 4

p

1

2

3

4

5

6

Beer

G

li

(

ll

)

This is the minimum amount of money the consumer would need to be paid to give up n units of the good.

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