Demand Supply and Market Welfare

📋 Course Outline

1. Buyer and Seller Gains
2. Demand and Supply Curves
3. Market Equilibrium
4. Consumer and Producer Surplus
5. Market Efficiency and Welfare
6. Taxes and Deadweight Loss
7. Price Regulation and Shocks

📖 1. Buyer and Seller Gains

🔑 Key Concepts & Definitions

• Buyer valuation : the cutoff point below which she wants to trade, and the buyer's gain from trade is V − P.
• Seller cost : the cutoff point above which he wants to trade, and the seller's gain from trade is P − C.

📝 Essential Points

• The total gain from trade is $V-C$, equal to the buyer's gain $V-P$ plus the seller's gain $P-C$.

💡 Memory Hook

Buyer values V; seller incurs cost C.

📖 2. Demand and Supply Curves

🔑 Key Concepts & Definitions

• Demand curve : shows the quantity buyers want to purchase at each price and slopes down.
• Supply curve : shows the quantity sellers want to sell at each price and slopes up.

📝 Essential Points