Lecture on Consumer and Producer Surplus, Price Ceilings, Rent Control, and Minimum Wage

These flashcards cover key vocabulary terms and their definitions related to consumer and producer surplus, price regulations, labor market dynamics, and tax incidences.

Consumer surplus

The excess of the benefit received from a good over the amount paid for it.

Producer surplus

The excess of the amount received from the sale of a good over the cost of producing it.

Total surplus

The sum of consumer surplus and producer surplus, maximizing welfare in competitive equilibrium.

Price ceiling

A regulation that makes it illegal to charge a price higher than a specified level.

Rent ceiling

A price ceiling applied to the housing market, causing a housing shortage if set below equilibrium rent.

Search activity

The time and effort spent looking for someone with whom to do business, which increases when there is a shortage.

Black market

An illegal market that operates alongside a legal market where restrictions are in place.

Deadweight loss

The loss of economic efficiency when equilibrium for a good or a service is not achieved.

Minimum wage

A regulation that makes it illegal to trade at a price lower than a specified level, applied to labor markets.

Tax incidence

The division of the burden of a tax between buyers and sellers, depending on the elasticities of supply and demand.