Principles of Microeconomics Lecture Notes

Set of vocabulary flashcards from the Principles of Microeconomics lecture, covering key terms related to efficiency, market functioning, and economic concepts.

Allocative Efficiency

A situation where the quantities of goods and services produced are those that people value most highly.

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 receive for a good and the minimum amount they would be willing to accept.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Marginal Cost

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

Deadweight Loss

The decrease in total surplus that results from an inefficient underproduction or overproduction of a good.

Market Failure

A situation where the market delivers an inefficient outcome.

Demand Curve

A curve that shows the quantity demanded at each price, reflecting buyers’ marginal benefit.

Supply Curve

A curve that shows the quantity supplied at each price, reflecting sellers’ marginal cost.

Invisible Hand

A concept by Adam Smith suggesting that individuals' self-interested actions can lead to positive social outcomes.