Using Supply and Demand to Analyze Markets

These flashcards cover key vocabulary and concepts related to supply and demand in microeconomics, including terms related to market structures, regulations, and economic impacts.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Producer Surplus

The difference between the price producers receive for a good or service and the minimum price they would be willing to accept.

Price Ceiling

A regulation that sets the maximum price that can be legally charged for a good or service.

Price Floor

A regulation that sets the minimum price that can be legally charged for a good or service.

Deadweight Loss (DWL)

The reduction in total surplus that occurs as a result of market inefficiencies.

Quota

A regulation that sets the quantity of a good or service that can be supplied to the market.

Tax Incidence

The distribution of the burden of a tax between buyers and sellers.

Subsidy

A payment by the government to a buyer or seller of a good or service to encourage production or consumption.

Equilibrium Price

The price at which the quantity demanded equals the quantity supplied.

Choke Price

The price at which the quantity demanded or supplied of a good becomes zero.