Understanding Consumer and Producer Surplus, Taxes, and Deadweight Loss

These flashcards cover key concepts related to consumer and producer surplus, taxes, and deadweight loss as discussed in the lecture.

Consumer Surplus

The difference between what consumers are willing to pay and what they actually pay.

Producer Surplus

The difference between the price received by producers and their minimum acceptable price.

Deadweight Loss

The lost economic efficiency when the equilibrium outcome is not achievable or not achieved due to taxed prices.

Tax Revenue

The income gained by the government through taxation.

Price Ceiling

A government-imposed limit on how high a price is charged for a product.

Price Floor

A government-imposed limit on how low a price can be charged for a product.

Binding Price Ceiling

When the ceiling price is set below the market equilibrium price, leading to shortages.

Binding Price Floor

When the floor price is set above the market equilibrium price, leading to surpluses.

Elasticity

A measure of how much buyers and sellers respond to changes in market conditions.

Welfare Economics

A branch of economics that focuses on the optimal allocation of resources and goods to increase economic welfare.

Tax Incidence

The distribution of tax burden between buyers and sellers.