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19 Cards in this Set
- Front
- Back
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consumer surplus |
the difference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer recieves |
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producer surplus |
difference between the lowest price a firm would be willing to pay for a good and the price it actually recieves |
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marginal benefit |
the additional benefit to a consumer from consuming one or more goods |
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consumer surplus in the market |
the area under the below the demand curve and above the prices that consumers pay |
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marginal cost |
the additional cost to a firm of producing one more unit of a good or service |
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total producer surplus |
area above the supply curve and below the market price |
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when is a market efficient |
1. all trades take place where the marginal benefit exceeds the marginal cost 2. if it maximizes the sum of consumer and producer surplus ( economic surplus) |
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economic effciency |
marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer and producer surplus is at maximum |
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when price increases what happens to consumer and producer surplus |
consumer surplus decreases while producer surplus increases |
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dead weight loss |
the reduction in economic surplus resulting from a market not being in competitive equlibrium |
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price ceiling |
legally determined max price that sellers can charge - lead to shortage |
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price floor |
legally determined minimum price that sellers may receive Ex minimum wage - lead to surplus |
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do price floors increase or decrease the price |
increase |
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black market |
a market in which buying and selling take place at prices that violate govt price regulations |
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what occurs when govt imposes price controls |
dead weight loss occurs and the economy suffers |
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what happens to the supply curve when tax is imposed |
the supply curve shifts up demand curve shifts down |
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some consumer and producer surplus will become tax revenue for the govt while some will become dead weight loss |
TRUE |
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tax incidence |
the actual division of the burden of a tax between buyers am sellers |
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what does the steep of the demand curve imply when it comes to taxes |
buyers do not change how much they buy when the price changes thus they take on much of the burden of the tax. |
