Foundations of Economics, 8th Edition

6.2 Value, Price, and Consumer Surplus

MyEconLab Concept Video

To investigate whether a market is efficient, we need to understand the connection between demand and marginal benefit and between supply and marginal cost.

Demand and Marginal Benefit

In everyday life, when we talk about “getting value for money,” we’re distinguishing between value and price. Value is what we get, and price is what we pay. In eco­nomics, the everyday idea of value is marginal benefit, which we measure as the maximum price that people are willing to pay for another unit of the good or service. The demand curve tells us this price. In Figure 6.4(a), the demand curve shows the quantity demanded at a given price—when the price is $10 a pizza, the quantity demanded ...