Course: Principles of Microeconomics (ECON 1) · Silver Oak University (fictional sample) · Prof. Kessler
Focus: Consumer & Producer Surplus & Efficiency · Objective 4 · SLO A & B

📋 Module Overview Page — "Start Here" (Canvas: Page, published)

Week 6 — Consumer & Producer Surplus & Efficiency

This week unlocks one of the most powerful ideas in all of microeconomics: markets, when they work well, generate the maximum possible benefit for buyers and sellers combined. You'll learn to measure that benefit — consumer surplus (CS) and producer surplus (PS) — as areas on a supply-and-demand diagram, and to see exactly why the competitive equilibrium is called allocatively efficient. You'll also see what happens when a price is pushed off the equilibrium — surplus shrinks, and some gains simply disappear.

The big question: When a buyer and seller agree on a price, who gets how much of the deal — and is the total "pie" as big as it can be?

By the end of this week, you can:

• define willingness to pay and willingness to sell and explain how they generate surplus;
• identify consumer surplus (the area under the demand curve and above the price) and producer surplus (the area above the supply curve and below the price) on a diagram;
• compute CS, PS, and total surplus for a linear market using ½ · base · height;
• explain why the competitive equilibrium maximizes total surplus (allocative efficiency);
• explain what happens to CS, PS, and total surplus when a price is forced above or below equilibrium.

Do this, in order:

1. Read & watch — the Week 6 resources (≈40 min). → Readings & Resources page
2. Lecture Tutorial — work through surplus and efficiency with your AI tutor (≈45 min). Due Sun, Oct 11. → submit the chat share link + summary
3. Practice Exercises — 6 quick reps, ungraded (≈15 min).
4. Quiz 6 — 10 questions, closed to AI (≈20 min). Due Sun, Oct 11.
5. Discussion 6 — "Efficiency vs. equity: is the most 'efficient' outcome always the fairest?" Initial post Fri, Oct 9, replies Sun, Oct 11.
6. Assignment 6 — the surplus & efficiency problem set (100 pts). Due Sun, Oct 11.
7. Workshop 6 — Graph & Model Workshop — find equilibrium and compute CS, PS, and total surplus on Desmos (50 pts). Due Sun, Oct 11.

A note before you start: the surplus diagram is a picture worth memorizing — the two triangles, their bases on the quantity axis, and their tips at the demand intercept (CS) and supply intercept (PS). If you can draw and label those triangles in under 60 seconds, you'll ace every surplus question on the midterm.

📣 Week 6 Announcement (Canvas: Announcement; available_from_offset_days = 35 — posts Mon, Oct 5)

Subject: Week 6 — The "size of the pie" question 🥧

Hi everyone,

Quick question: when you buy a coffee for $4, and you would have paid up to $6 — where does that extra $2 go? The answer is consumer surplus: it's yours, it's real value, and it doesn't show up on the receipt. This week we measure that value — for buyers and sellers — and prove that the market equilibrium makes the total "pie" as large as possible.

This week, don't miss:

• The idea that willingness to pay minus price = consumer surplus — and it's a triangle on the diagram.
• The symmetric idea for sellers: price minus willingness to sell = producer surplus — also a triangle.
• Why pushing the price away from equilibrium makes both triangles shrink — and why the missing area is called deadweight loss. (We'll come back to that idea in Week 7.)
• The efficiency vs. equity discussion — efficiency maximizes the total, but that's a positive claim, not a verdict on how the pie should be divided.

Start with the Module Overview ("Start Here"), then the readings, then your AI Lecture Tutorial. The Workshop this week has you computing both surplus triangles — draw the diagram first and label every corner before you calculate.

See you in class,
Prof. Kessler