Measuring Economic Welfare

Paper Summary:

This paper explains one of the techniques for measuring consumer welfare and producer welfare and then discusses both the advantages and disadvantages to using consumer and producer surpluses to determine the economic welfare. The paper also points out how the concepts of consumer and producer surpluses are useful in evaluating how different policies affect the welfare of consumers and producers.

From the Paper:

"A common way to measure economic welfare is to use the concepts of producer and consumer surplus (Wikipedia, 2002). The demand curve reveals how much consumers are willing to pay to purchase the unit of a good. The supply curve reveals the price at which producers are just willing to supply."

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