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28 Cards in this Set
- Front
- Back
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Willingness to Pay |
Helps to determine the shape of demand curve |
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Individual Consumer Surplus |
Difference between willingness to pay and price (Net gain to consumer) |
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Total Consumer Surplus |
Sum of all individual consumer surpluses in a market |
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Consumer Surplus |
Both the individual and consumer surplus |
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Cost |
Lowest price someone is willing to pay (determines supply curve) |
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Individual Producer Surplus |
Sale generates a net gain to producer (Price is above production costs) |
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Total Producer Surplus |
Sum of all individual producer surpluses in a market |
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Producer Surplus |
Both individual and total producer surplus |
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Total Surplus |
Total gain to society from the production and consumption of a good |
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Progressive Tax |
Tax that rises more than in proportion to income |
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Regressive Tax |
Tax that rises less than in proportion to income |
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Proportional Tax |
Tax that rises in proportion to income |
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Excise Tax |
Tax on the purchase of a good |
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Tax Incidence |
How the burden of the tax is divided between consumers and producers |
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Deadweight Loss |
Excise tax causes... |
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Administrative Costs |
Resources used to collect the tax, to pay it, and to evade it |
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Lump-Sum Tax |
Tax of fixed amount paid by all the taxpayers |
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Utility |
Customer's maximum level of satisfaction |
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Util |
Hypothetical unit used to measure utility |
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Marginal Utility |
Additional utility generated by consuming one more unity of that good or service |
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Principle of Diminishing Marginal Utility |
Consumption of another unit of a good or service yields less additional utility than previous unit |
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Marginal Utility Curve |
Graph demonstrating the amount of utility consuming a product brings |
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Budget Constraint |
Limits a consumer's spending to no more than his/her income |
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Consumption Possibilities |
Set of all affordable consumption bundles |
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Budget Line |
Someone who spends all of his/her income |
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Optimal Consumption Bundle |
Maximizes total utility |
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Optimal Consumption Rule |
marginal utility of a good divided by the price is the same |
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Marginal Utility per Dollar |
What the utility is per $1 |
