Flashcard Set Preview
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| 1 |
Economic Efficiency
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marginal benefit of last unit consumed is equal to the marginal cost of producing that unit...
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| 2 |
Economic Surplus
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consumer surplus + producer surplus (will be maximized)
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| 3 |
willingness to pay= _____________= _____________
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marginal benefit, demand curve(can use terms interchangeably)
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Producer Surplus
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the difference between the price the firm receives and the price hey would have been willing...
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Willingness (producer surplus)
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marginal cost of producing the good (additional cost incurred for each unit produced)
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| 6 |
Total Economic Surplus=
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Consumer Surplus + Producer Surplus
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| 7 |
P(Q) format
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y=a+bx
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| 8 |
Price Ceiling
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a legally determined maximum price
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price floor
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a legally determined minimum price
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deadweight loss
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the reduction in economic surplus resulting from a market not being in competitive equilibrium
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| 11 |
most controversial price floor
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minimum wage
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| 12 |
Reduce economic efficiency with
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-quantity restrictions-price restrictions-externalities
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| 13 |
externalities
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a cost or a benefit borne by a third party(not the buyer or seller of the good or service)
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| 14 |
Demand=
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marginal benefit private(benefit to buyer/consumer of good or service)
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| 15 |
Supply=
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Marginal cost private(cost to seller/ producer)
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