Explain how the buyers’ willingness to pay, consumer surplus, and the demand curve are related.

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QUESTION 1:

Explain how the buyers’ willingness to pay, consumer surplus, and the demand curve are related.
Name two types of market failure. Explain why each may cause market outcomes to be inefficient.

QUESTION 2:

What happens to consumer and producer surplus when the sale of a good is taxed?
How does the change in consumer and producer surplus compare to the tax revenue? Explain.

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