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10 Cards in this Set
- Front
- Back
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welfare economics
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the study of how the allocation of resources affects economic well-being
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willingness to pay
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a buyers maximum that measures how much that buyer values the good
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consumer surplus
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the amount a buyers is willing to pay for a good minus the amount the buyer actually pays for it-->the area BELOW the DEMAND curve and ABOVE the PRICE measures the consumer surplus in a market, good measure of economic well-being
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cost
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opportunity cost, out-of-pocket expenses, value on time
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produce surplus
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amount a seller is paid minus the cost of production-->area BELOW the PRICE and ABOVE the SUPPLY curve
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marginal seller
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the seller who would leave the market first if the price were any lower
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equity
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the fairness of the distribution of well-being among the various buyers and sellers
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total surplus in a market
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total area between the supply and demand curves up to the point of equilibrium
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externalities
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side effects that cause welfare in a market to depend on more than just the value to the buyers and the cost to the sellers
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market failure
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the inability of some unregulated markets to allocate resources efficiently
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