Microeconomics Chapter 6

Front 1

Chapter 6

Back 1

Consumer Surplus, Product Surplus, & Market Efficiency

Front 2

Utility

Back 2

The satisfaction, or pleasure, that we derive from the consumption of goods & Services.

Front 3

Marginal Utility

Back 3

The additional utility derived from an additional unit consumed.

Front 4

Law of Diminishing Marginal Utility

Back 4

The additional (or marginal) utility derived from additional units of goods or service consumed will eventually diminish as more units are consumed.

Front 5

Marginal Benefit

Back 5

A measure of the value of each additional unit to the consumer in terms of how much money each additional unit is worth to the consumer, or the maximum amount the consumer will pay for each additional unit.

Front 6

Consumer Surplus

Back 6

The maximum amount the consumer is willing to pay for a product minus the amount the consumer actually has to pay (the Market price)

Front 7

Marginal Cost

Back 7

The additional cost of producing one more unit of output

Front 8

Law of Diminishing Returns

Back 8

?

Front 9

Fixed Cost

Back 9

Must be paid whether the seller produces output or not.

Front 10

Perfectly Competitive Market

Back 10

?

Front 11

Producer Surplus

Back 11

The actual amount a producer receives for a product (the Market price) minus the minimum amount the producer is willing to accept in exchange for the product (marginal cost)

Front 12

Efficiency

Back 12

?

Front 13

Deadweight Loss

Back 13

The difference between the maximum total consumer and producer surplus and the total consumer and producer surplus that results in a given situation.