ap microeconomics 2.6

market equilibrium

a stable, balanced state, where the price and quantity that maximize net social benefit

Equilibrium/Market Clearing Price

the price where the quantity demanded equals the quantity supplied

Equilibrium/Market Clearing quantity

quantity supplied and demanded at the equilibrium price

consumer surplus

the sum of the benefits received by the consumer as a result of paying an equilibrium price that is lower than the price they'd be willing to pay

producer surplus

the sum of benefits received by producers as a result of selling at an equilibrium price that is higher than the price they'd be willing to sell

total surplus

the sum of consumer surplus and producer surplus

deadweight loss

loss of total benefits suffered by society when a free market is disturbed and a non-optimal quantity is bought and sold instead of the equilibrium quantity

how do you find total revenue?

price times quantity

market surplus

(overproduction) when the quantity supplied is greater than the quantity demanded

market shortage

(underproduction) when the quantity demanded is greater than the quantity supplied

what do deadweight losses typically look like?

triangular shaped areas that point towards equilibrium

if one curve shifts...

both price and quantity move

if both curves shift...

only one (either price or quantity) change