econ test 3

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6 Terms

1
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The maximum price that a buyer will pay for a good is called

willingness to pay

2
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We can say that the allocation of resources is efficient if

total surplus is maximized

3
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f the cost of producing tables increases causing the price of tables to increase, consumer surplus in the table market will 

Decrease 

4
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As a result of a decrease in price 

new buyers enter the market, increasing consumer surplus.

5
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Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Consumer and Producer surplus

6
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The distinction between efficiency and equality can be described as follows

Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society of society.