Chapter 4 - Consumer and Producer Surplus, Price Controls, and Economic Efficiency

This set of flashcards covers key concepts related to economic surplus, price controls, and market efficiency from Chapter 4.

Consumer Surplus

The area between the Demand Curve and the price level.

Producer Surplus

The area between the Supply Curve and the price level.

Economic Surplus

The combination of Producer and Consumer Surplus.

Price Ceiling

A cap on the price that the government sets so the price cannot go up to equilibrium.

Price Floor

A minimum price that buyers are expected to pay for a product, set above the equilibrium price.

Deadweight Loss

A cost to society created by market inefficiency, occurring when supply and demand are out of equilibrium.

Market Equilibrium

The state where the quantity supplied equals the quantity demanded.

Shortage

A situation in which the quantity demanded exceeds the quantity supplied at a given price.

Surplus

A situation in which the quantity supplied exceeds the quantity demanded at a given price.

Tax Incidence

The distribution of a tax burden between buyers and sellers.