Economics Module 5: Efficiency/Equity/Surplus

Flashcards focused on key concepts related to efficiency, equity, and surplus in economics.

Equilibrium

A state in a market where supply equals demand, clearing the market and avoiding deadweight losses.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay.

Producer Surplus

The difference between the price producers receive for a good and the minimum they would accept.

Willingness to Pay

The maximum price a consumer is willing to pay for a good or service.

Minimum Willingness to Accept

The lowest price at which a producer is willing to sell a good or service.

Deadweight Loss

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

Social Surplus

The sum of consumer surplus and producer surplus in a market.

Marginal Cost

The cost of producing one more unit of a good or service.

Total Surplus

The total benefits to society from the production and consumption of a good, calculated as the sum of consumer and producer surplus.

Equity

The fairness with which resources and wealth are distributed within a society.

Efficiency

The optimal allocation of resources where total surplus is maximized.

Market Clear

When the quantity supplied equals the quantity demanded at a given price.

Welfare Economics

The study of how the allocation of resources affects economic well-being.