Week 6 · Readings & resources

Week 6 — Readings & Resources

Principles of Microeconomics Free sample edition

Your primary reading is Chapter 6 (in this module). Everything below is the optional, go-deeper layer — pick what helps, skip the rest.

How to use this page

This page has 10 items (4 readings and 6 videos). Allow 67–75 minutes for everything. Each group points back to the matching chapter section and class-session segment, so use the full menu when you want more, or take the quick path below.

Every video here has captions: turn them on with the CC button in the player. The chapter covers the same ideas in text.

Pick-one quick path (19–21 min total)

① Who gains from a trade, and by how much

Chapter 6, Section “Add up the gains: consumer, producer, and total surplus” · Session 1, Segment 3, “Adding up the gains” · Remember: a buyer gains value minus price, a seller gains price minus cost, and total surplus adds the two.

Consumer and Producer Surplus — Economics Mafia — a three-minute animation of one computer market where the price is 500 dollars: buyers who value a computer at 700, 600, and 500 dollars gain 200, 100, and 0 dollars, a buyer who values it at 400 dollars does not buy, and sellers who would accept 300, 400, and 500 dollars gain 200, 100, and 0. Adding the buyers' gains gives consumer surplus, adding the sellers' gives producer surplus, and the two together make total surplus. It is the chapter's ladder with different people and its own numbers, and it measures the size of the gains, a positive question. Its last line, that the equilibrium is also allocatively efficient, is a preview of the efficiency group below. (video, 3 min) (captions: creator)
Consumer Surplus: What is it and How to Calculate it — Economics in Many Lessons — five short worked cases, from one shopper's boots to four concert-goers deciding whether to buy at one price, ending with a triangle under a demand curve. Pause before each case and work it yourself first; the four concert-goers are a small ladder like the bicycles. (video, 7 min) (captions: automatic)
Producer Surplus an Overview — Economics in Many Lessons — a short overview of the seller's side: the least a seller would accept, a one-backpack example, and the triangle above a supply curve. It mentions fixed costs and marginal cost in passing; those ideas arrive with the firm weeks, so for now hold on to price minus the seller's cost. (video, 3 min) (captions: automatic)
The Bread Market! — Foundation for Teaching Economics — a teaching foundation's lesson page, written for instructors, describing a classroom market in which buyers hold cards with the most they will pay for a loaf and sellers hold cards with their costs. Read it to picture willingness to pay and willingness to sell as real cards in real hands, and notice how each trade's gain is recorded. (reading, 5–7 min)

② Reading surplus as areas on the diagram

Chapter 6, Section “Measure the triangles: surplus on the running market” · Session 2, Segment 6, “The two triangles” · Remember: with straight lines, each surplus is a triangle, one half times base times height.

What is Consumer Surplus? — Think Econ — an explainer that reads the demand curve the other way, from a quantity up to the most buyers would pay, calls that top price a reservation price, and shades consumer surplus as the triangle below demand and above the price. Its reservation price is the chapter's willingness to pay under another name. Use it while working through the Week-6 module overview. (video, 6 min) (captions: automatic)
How to Calculate Producer Surplus and Consumer Surplus from Supply and Demand Equations — Think Econ — starts from two equations, solves for the equilibrium, finds where each line meets the price axis, and computes both triangles as one half times base times height. This builds on Week 4's work solving Qd = Qs for the market equilibrium; its numbers are its own, so follow the method rather than the figures. (video, 6 min) (captions: creator)

③ Efficiency, fairness, and measuring value for real

Chapter 6, Section “Keep efficiency and equity apart” · Session 2, Segment 8, “Efficiency versus equity” · Remember: efficiency is about the size of the gain, a positive question; equity is about its split, a normative one.

Markets, Efficiency, and Price Signals: Crash Course Economics #19 — CrashCourse — an episode that separates productive efficiency from allocative efficiency, producing the things buyers value most, and shows prices steering goods toward the people who value them most. Stop at the segment on price gouging; next week takes up what happens when a law limits a price. (video, 11 min) (captions: creator)
Mortality Risk Valuation — U.S. Environmental Protection Agency — the agency's explanation of why it measures the benefit of a cleaner-air rule by what people are willing to pay for a small drop in risk, and why it says it does not put a dollar value on any one person's life. Read the first five questions to see willingness to pay used as a positive measure, and notice where the page leaves the value judgments to others. (reading, 8–10 min)
Using Massive Online Choice Experiments to Measure Changes in Well-being — Proceedings of the National Academy of Sciences (PubMed Central) — a research article in which economists asked large samples of people how much they would need to be paid to give up a free online service for a while, as a way to measure the consumer surplus of goods whose price is zero. Read the Abstract and the Significance statement, and ask what willingness to pay can and cannot capture. (reading, 8–10 min)

Optional one-stop reference (free online reference)

Book III, Chapter VI: Value and Utility, in Alfred Marshall's Principles of Economics — Library of Economics and Liberty — the economist's own definition of what he called consumer's surplus, in section 1, and his worked example of buying tea, in section 2; read those two sections and skip the rest of the chapter, whose language is older and slower going. (reading, 10–12 min)

Heads-up (links rot): these point to outside sites that occasionally move or rename pages. If a link ever fails, tell your instructor and use the reference above in the meantime.

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