Chapter 4: Consumer Surplus, Producer Surplus and Economic Efficiency

Deadweight loss

________ represents the decrease in economic welfare or economic surplus that results from disequilibrium market outcomes.

Consumer surplus

________ is the difference between what you are willing and able to pay for a good and the price that you actually pay for the good.

deadweight losses

Because restrictions on market activity generate ________ and tend to benefit some groups at the expense of others, they are highly controversial.

Consumer surplus

________ can also be viewed as the net benefit you receive from obtaining a good or service, since it is the difference between the benefit you receive from a good, measured as your willingness to pay for the good, and the price you pay for the good.

producer surplus

the difference between the price at which a seller is willing and able to sell a good and the price that he or she actually receives for the good.

price ceiling

Restrictions that place an upper limit on the price that can be charged for a good or service are called price ceilings

price floor

place a lower limit on the price of a good or service by establishing a minimum price that can be charged for a good or service.

quota

used to restrict the production of goods and services or to limit the amount of imports of goods allowed into a country.