Ch 14 Consumer's Surplus Flashcards
1
Q
Gross benefit (gross consumer’s surplus)
A
Area under the demand curve to the point of consumption
2
Q
Net benefit (net consumer’s surplus)
A
Area under the demand curve but above the price level to the point of equilibrium
3
Q
Compensating variation
A
Change in income that will just compensate the consumer for a change in prices (restoring them to the original indifference curve)
4
Q
Equivalent variation
A
Income change that is equivalent to the price change in terms of change in utility
5
Q
Supply curve
A
Amount supplied at each price
6
Q
Producer’s surplus
A
Area above the supply curve and below the price level to the point of equilibrium
7
Q
Effective price
A
The price that would induce consumers to demand a given quantity
