Market equilibrium & Consumer surplus + producer surplus
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6 Terms
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Equilibrium
when Qd = Qs
2
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Disequilibrium
Surplus: Qs > Qd
Shortage: Qs < Qd
3
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Price Signals
Information that prices of a good can convey in order to efficiently allocate resources in the market
4
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Consumer Surplus
The difference between what you are willing to buy and what you actually pay
CS = Buyer’s max - price
5
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Producer surplus
difference between the price the producer recieved and how much they were willing to sell it for.
PS = Price - Seller’s min
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How do you calculate CS and PS?
Identify the triangle on the graph
Calculate area of triangle
Note 
Flashcards (79)