In this chapter, we took the supply and demand hammer and pounded every nail in sight. We saw how you can compute the consumer and producer surplus generated by transactions in a market, learned how to value new goods, and learned what deadweight loss is. We learned to use supply, demand, and total surplus to analyze industries and the ways in which they change in response to changes in the market, particularly to price and quantity regulations, taxes, and subsidies. Being able to do so much with such a simple model makes supply and demand the workhorse of microeconomics.

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