Chapter 7 Flashcards
1
Q
Consumer surplus
A
Willing to pay (how much it’s valued) - actual cost of the good
2
Q
How do you calculate the consumer surplus of a market?
A
Area of a triangle = 1/2BH
3
Q
When price is lower
A
consumer surplus is higher
4
Q
Producer surplus
A
The minimum price they will sell a good or service - cost it takes to provide good or service
5
Q
when cost is higher
A
producer surplus is higher
6
Q
Efficiency
A
The property of a resource allocation of maximizing the total surplus received by all
society.
7
Q
Equality
A
The property of distributing economic prosperity uniformly among the members of
society.
