Demand and Supply

total surplus.

The sum of consumer surplus and producer surplus is social surplus, also referred to as economic surplus or total surplus.

Demand

________ is fundamentally based on needs and wants.

producer surplus.

The amount that a seller is paid for a good minus the sellers actual cost is called producer surplus.

Demand

________ is also based on ability to pay.

Law of Demand

As the price increases, the quantity demanded decreases and as the price decreases the quantity demanded increases

Supply

The amount of good and services a producer is willing to supply

Law of supply

The higher the price leads to a higher quantity and the lower price leads to a lower quantity supplied

equilibrium

The point where the supply curve and demand curve cross

price ceilings

keeps a price from rising above a certain level

price floor

a lowest price that one can legally pay from some good or service

consumer surplus

The amount of individuals would have been willing to pay minus the amount they actually pay

deadweight loss

the loss in social surplus that occurs when the economy produces an inefficient quantity