Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

13 Cards in this Set

  • Front
  • Back
Efficient allocation
allocation of resources that occurs when G/S are produced that poeple highly value
Marginal Benefit
*benefit a consumer receives from consuming one more unit of good
*Maximum someone is willing to pay
***D = MB
Marginal Cost
*OC of producing one more unit of a good or service
*As more product is producted the marginal cost increases
*Minimum price a supplier will accept
****S = MC
Consumer surplus
Value of the goood minus the price paid for it

Area under the D and above the market price
Producer surplus
Price of the good minus the opportunity cost of producing it

Area below the market price and above the supply curve
When is a competitive market efficient?
When MB = MC!

Occurs when the quantity produced is the same quantity highly valued/demanded
What happens when MB > MC
Product is more highly valued than it costs

Increases production
What happens when MC > MB
Product costs more than it is valued

Decrease in production
Effect of taxes on price and quantity produced
Taxes increase the price to buyers
Lowers the price received by sellers
Decreases the quantity produced
Deadweight loss
Decrease in consumer surplus and producer surplus that results from an inefficient level of production

*A loss for society
causese a deadweight loss to the left of the equilibrium price
causes a deadweight loss to the right of the equilibrium price
Who is affected by a deadweight loss?
Loss toward the entire society

Does not soley effect the producer or consumer