chapter 7 Flashcards
1
Q
Invisible hand
A
The invisible hand
* efficiently allocates goods and services to buyers and sellers.
* leads to efficient production within an industry
* allocates resources efficiently across industries
(Prices direct the invisible hand)
2
Q
Social Surplus
A
the sum of the Consumer Surplus and the Producer Surplus.
3
Q
Pareto Efficiency
A
When no one can be made better off without
making someone else worse off
4
Q
price floor
A
a legally established minimum price for a good or service
5
Q
Price ceilings
A
a legally established maximum price for a good or service
6
Q
Deadweight loss
A
The reduction in social surplus resulting from a market intervention
7
Q
Equity
A
Addresses the issue of a “fair” distribution of resources across society
8
Q
efficiency
A
Price controls act to restrict efficiency.
