Economics Efficiency

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8 Terms

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Consumer surplus

The difference between the buyers willingness to pay and the actual price payed

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Marginal benefit

Additional benefit gained through consuming and extra good or service

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Producer surplus

the difference between the lowest price a firm would be willing to accept for a good and the price it actually receives

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Total surplus

A measure of net benefits to society for the production and consumption of a good

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DWL

An avoidable decrease in total surplus

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Price ceiling

Legislated maximum price producers are allowed to charge

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Price floor

Legislated minimum price producers are allowed to charge

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Subsidy

A cash payment from governments to businesses to encourage the production of goods/services