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Old 11-06-2007, 08:31 PM
wdead wdead is offline
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Join Date: Apr 2005
Location: Los Angeles
Posts: 4,323
Default Re: ZOMG MICRO ECONOMICS WTFFFF

yea thats right.
here let me put it this way.
consumer surplus is when someone buys a product for $5 dollars that they value at 6 dollars. they have a surplus of 1 dollar.
producer surplus is when someone sells something for 5 dollars they value at 3 dollars.
Essentially, society (consisting only of buyer and seller) has gained 3 dollars worth of utility from this transaction. thus, there is a social surplus.
Note this can happen where both buyer and seller are happy.

Social surplus is thus consumer surplus+producer surplus.

So this will be look like the consumer surplus triangle (which is right) plus the producer surplus triangle (which is also right), creating a triangle pointing right on the S and D graph.
Note: Most government activities produce a NEGATIVE social surplus for society. Seriously.
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