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non-binding price floor
Graphical demonstration without impact on market equilibrium
binding price floor
Graphical demonstration with impact on market equilibrium
consumer surplus
The difference between the price paid by consumers and the maximum price they are willing to pay
producer surplus
The difference between the price received by producers and the minimum price they are willing to accept
deadweight loss
The loss of economic efficiency that occurs when the market equilibrium is not achieved
consumer tax
Tax imposed on consumers, affecting market demand curve and equilibrium prices and quantities
demand curve
Graphical representation of the relationship between the price of a good and the quantity demanded
supply curve
Graphical representation of the relationship between the price of a good and the quantity supplied
inelastic demand
Demand that is less responsive to price changes
elastic supply
Supply that is more responsive to price changes
tax burden
The portion of a tax that is borne by a specific party
seller tax
Tax imposed on sellers, affecting market prices and quantities
consumer tax
Tax imposed on consumers, affecting market prices and quantities
tax burden shift
Transfer of tax burden from one party to another
cigarette tax
Tax imposed on each pack of cigarettes sold
supply and demand diagram
Graphical representation of the interaction between supply and demand in a market
price received by producers
The amount of money received by producers for each unit sold
price paid by consumers
The amount of money paid by consumers for each unit purchased
quantity of cigarettes sold
The number of cigarettes sold in the market
consumer surplus
The difference between the maximum price consumers are willing to pay and the price they actually pay
producer surplus
The difference between the minimum price producers are willing to accept and the price they actually receive
total surplus
The sum of consumer surplus and producer surplus
market demand equation
Equation representing the relationship between price and quantity demanded in a market
market supply equation
Equation representing the relationship between price and quantity supplied in a market
equilibrium price
The price at which quantity demanded equals quantity supplied
equilibrium quantity
The quantity at which quantity demanded equals quantity supplied
price floor
Minimum price set by the government for a good or service
consumer surplus
The difference between the maximum price consumers are willing to pay and the price they actually pay
producer surplus
The difference between the minimum price producers are willing to accept and the price they actually receive
total surplus
The sum of consumer surplus and producer surplus
deadweight loss
The loss of economic efficiency that occurs when the market equilibrium is not achieved
price control policy
Government policy that directly controls the price of a good or service
tax policy
Government policy that imposes taxes on goods or services
tax revenue
The total amount of money collected by the government from a tax
deadweight of the tax
The loss of economic efficiency caused by a tax
