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5 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Consumer Surplus |
This is a measure of consumer welfare- it measures the difference between what consumers are willing to pay and the actual market prince.
It is found by the area below the demand curve and above the equilibrium price. |
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Producer Surplus |
It is a measure of producer welfare. It measures the difference between the minimum price producers are willing to sell at and the actual market prince.
It is found by the area above the supply curve and below the equilibrium price. |
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Positive Statement |
An objective statement that can be tested, amended or rejected by referring to the given evidence. |
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Normative Statement |
A subjective statement that carries a value judgement. |
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Price mechanism |
Refers to the way in which prices respond to changes in demand and supply for a product or factor input, so that a new equilibrium position is reached in the market. |
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