Note Consumer’s Surplus and Producer’s Surplus

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Note  Consumer’s Surplus and Producer’s Surplus Consumer’s surplus was initially involved by Marshall, which was further developed by J. R. Hicks. Along with the consumer concept of surplus, there is equally important concept of producer’s surplus. Consumer’s surplus’ is from consumer’s point of view whereas producers surplus is from producer’s point of view. SD is the demand curve GS’ is the […]

Practical Utility of Consumer’s Surplus

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Practical Utility of Consumer’s Surplus Although incapable of precise measurement, the concept of consumer’s surplus has a great practical utility and theoretical importance. Conjectural importunate enables us to Coimbatore the advantages of environment and opportunities, or conjunct Ural benefits. A person gelling Rs. SOU in Delhi can enjoy better amenities of Ii(c than a person gelling Rs. 1,000 in a place […]

Prof Hicks Concept of Consumer’s Surplus

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Prof Hicks Concept of Consumer’s Surplus Professor Hicks has further developed the concept of consumer surplus and has propounded four kinds of consumer’s surpluses which are : (i) Price Compensating Variation (ii) Price Equivalent Variation (iii) Quantity Compensating Variation (iv) Quantity Equivalent Variation The discussion of all these Kirov consumer’s S. Plus is beyond the scope of this […]

Measurement of Consumer’s Surplus with Indifference Curve

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Measurement of Consumer’s Surplus with Indifference Curve As has been noticed above, Marshall measure of consumer’s surplus has been sever criticism. The most important objection against the Marshall measure of consumer’s surplus with the help of demand curve (or marginal utility curve) is that it is based 011 the twin  assumptions that utility is measurable and marginal utility of Kinney remains […]

Criticism of Consumer’s Surplus

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Criticism of Consumer’s Surplus The concept of consumer’s surplus has been subjected to scathing criticism by economists like ~an~an, Nicholson, Robinson and Davenport. Its Scientific character has been attacked on the ground that it is based on assumptions which are unwarranted. As pointed out above. there are several difficulties its exact measurement so that it has little practical utility, II~measurement assumes that […]

A complete list of demand prices is not available

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A complete list of demand prices is not available We are aware of a part only of the demand schedule. As we do not know what prices we arc prepared to pay fur everyone of the units, the whole of the consumer’s surplus cannot be ascertained. In actual life, however, we are concerned with that part of the  demand […]

Hicksiun Refinement

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Hicks Refinement II.s already mentioned. Hicks has defined consumer’s surplus as the difference between marginal valuation of a unit and the price which is actually paid for it. The difficulty in the concept of consumer’s surplus centers round the calculation of this marginal valuation. The assumption of constant marginal utility of money enabled Marshall to ignore the differences between various marginal valuations. Tiling makes […]

Diagrammatic Representation.

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Diagrammatic Representation. Along OX are measured the units of the commodity to be purchased, and along YO is measured the utility in tens of money, which means the price that the consumer is willing to pay rather than go without a particular unit of the commodity. If the market price is PM, the consumer will extend his purchase up to […]

Consumer’s Surplus and the Law of Diminishing Marginal Utility

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Consumer’s Surplus and the Law of Diminishing Marginal Utility The concept of consumer’s surplus may be derived from the law of diminishing utility. The idea will be dear from the table given below. The figures in the following table arc merely illustrative representations of the amount of utility. Any other figures may be taken. provided variations in […]

Meaning

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Meaning We owe to Marshall the introduction of the concept of consumer’s surplus. His idea was to give a definite expression to something with which we, as consumers, are all familiar. Even in our ordinary purchases there is some consumer’s surplus since we may be prepared to pay more than we actually pay for a commodity. But consumer’s […]