Consumer Surplus, Producer Surplus, and Market Efficiency
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These flashcards cover key concepts related to consumer surplus, producer surplus, and market efficiency, as discussed in the lecture.
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10 Terms
Consumer Surplus
The difference between what a buyer is willing to pay for a good and what the buyer actually pays.
Producer Surplus
The difference between what a seller is paid for a good and the cost of providing it.
Market Efficiency
A situation in which all resources are allocated in a way that maximizes total surplus, benefiting society as a whole.
Total Surplus
The sum of consumer surplus and producer surplus in a market.
Welfare Economics
The study of how the allocation of resources affects economic well-being.
Demand Curve
A graph showing the relationship between the price of a good and the quantity demanded.
Equilibrium Price
The price at which the quantity of a good demanded equals the quantity supplied.
Price Ceiling
A legal maximum price that can be charged for a good.
Price Floor
A legal minimum price that must be paid for a good.
Externalities
Costs or benefits that affect parties who did not choose to incur those costs or benefits.
