Microeconomics,, 16th Canadian Edition

(Sean Pound) #1

1 Any policy that changes the total amount of economic surplus may also create a redistribution
surplus between consumers and producers (as we will see in Figures 5-7 and 5-8). If total surplus
rises, those who gain could, at least in principle, compensate those who lose, with the overall
result being that everyone is made better off by the policy. Even though such compensations rarely
occur in practice, economists often use this underlying logic and say that “society gains” when
total economic surplus increases.


2 In Part 6 of this book, we will see some important exceptions to this rule when we discuss
“market failures.”

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