S E quivalent Utility g Jains Res Reservation Price Curve for Rice Prices s value of net utility gains-to-trade pG Rice
$ Equivalent Utility Gains Rice Res. Prices pG Reservation Price Curve for Rice $ value of net utility gains-to-trade
S Equivalent Utility gains Unfortunately, estimating a consumer's reservation-price curve is difficult .SO, as an approximation, the reservation-price curve is replaced with the consumer's ordinary demand curve
◆Unfortunately, estimating a consumer’s reservation-price curve is difficult, ◆so, as an approximation, the reservation-price curve is replaced with the consumer’s ordinary demand curve. $ Equivalent Utility Gains
Consumers surplus + A consumer's reservation-price curve is not quite the same as her ordinary demand curve. Why not? + A reservation-price curve describes sequentially the values of successive single units of a commodity An ordinary demand curve describes the most that would be paid for g units of a commodity purchased simultaneously
◆A consumer’s reservation-price curve is not quite the same as her ordinary demand curve. Why not? ◆A reservation-price curve describes sequentially the values of successive single units of a commodity. ◆An ordinary demand curve describes the most that would be paid for q units of a commodity purchased simultaneously. Consumer’s Surplus
Consumers surplus Approximating the net utility gain area under the reservation-price curve by the corresponding area under the ordinary demand curve gives the Consumer's Surplus measure of net utility gain
◆Approximating the net utility gain area under the reservation-price curve by the corresponding area under the ordinary demand curve gives the Consumer’s Surplus measure of net utility gain. Consumer’s Surplus