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20 Cards in this Set

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  • Back
Consumer Surplus
the measure of the difference between what a person is willing to pay for a commodity and the amount he/she actually is required to pay
Marginal Cost (MC)
the change in total costs and the change in total variable costs per unit change in output
Utility
satisfaction from consumption of a good or service
Marginal Utility
diminishes with each consecutive consumption
Total Utility
rises as goods or services are consumed... up to a point
Price Floor
low stating that there is a lowest possible price for a good or service
Black Market
underground economy
shortage with a definate demand
legal and illegal goods
Price Ceiling
price established by some forms of gov't. Highest prossible price that can be charged for a good/service
Price Ceiling
price established by some forms of gov't. Highest prossible price that can be charged for a good/service
Elasticity of Demand
small change in price causes a large change in quantity demanded
Inelastice Demand
small change in price does not cause a large change in the quantity demanded
Efficiency
Situation where a company cannot produce more of one good without producing less of another, and when all available resources are used
Inefficiency
a situation where a company is not producing the ideal amount of of one product or another, or when not all resources are used
External Benefits
benefits that people do not pay for or are not included in the market price of a service of good
External Costs
costs people bear that are not paid or compensated for
Producer Surplus
the price of a good, minus the marginal cost of producing it, summer of the quantity sold
Subsidy
monetary assistance granted by a gov't to a person or group in support of an enterprise regarded as public interest
Quota
restriction on the maximum amount of a good that can be made
Invisible Hand
Adam Smith - directs the actions of individuals/companies to combine for the common good; does not intend to promote the public interest, only gain personally
Deadweight Loss
the decrease in consumer surplus and producer that results from an inefficient level of production