Economics 102 Introduction to Economics Chapter 7 Study Guide

These flashcards cover key terms and concepts from Chapter 7 of the Economics 102 study guide.

Invisible Hand

The concept that self-interested actions of individuals can lead to positive social outcomes.

Social Surplus/Total Surplus

The sum of consumer and producer surplus; the total benefit to society from market trade.

Pareto Efficiency

A situation where no one can be made better off without making someone else worse off.

Deadweight Loss

The reduction in social surplus that results from market intervention.

Coordination Problem

The challenge of bringing together self-interested economic agents to form functioning markets.

Incentive Problem

The challenge of motivating economic agents to participate in markets.

Market Economy

An economic system where prices direct the flow of resources and provide incentives for participants.

Command Economy

An economic system where a central agency directs resources and provides incentives.

Equity Addresses

The issue of ensuring a fair distribution of resources across society.

Consumer Surplus

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

Producer Surplus

The difference between what producers are willing to accept for a good and the price they actually receive.