Chapter 15: The "Invisible Hand" and the First Welfare Theorem

Static Graphics

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Two Consumers behaving as One Unit

Aggregating Consumers with Quasilinear Tastes

Aggregate Consumer and Worker Surplus when Tastes are Quasilinear

Three Ways of Illustration Short Run Profit or Short Run Producer Surplus

Producer Surplus in Labor Markets

Surpluses in Output and Labor Markets

A Social Planner finding the "Optimal" Output X*

The First Welfare Theorem with more General Tastes

SM (p) = 547,192 p2/3 and DM (p) = 40,000,000 / p2 from Graph 14.12e [superscripts M, 2 and 2/3]