Chapter Seven: Consumers, Producers, and the Efficiency of Markets Flashcards
1
Q
Welfare Economics
A
The study of how the allocation of resources affects economic well-being
2
Q
Willingness to Pay
A
The maximum amount that a buyer will pay for a good
3
Q
Consumer Surplus
A
A buyer’s willingness to pay minus the amount the buyer actually pays
4
Q
Cost
A
The value of everything a seller must give up to produce a good
5
Q
Producer Surplus
A
The amount a seller is paid for a good minus the seller’s cost
6
Q
Efficiency
A
The property of a resource allocation of maximizing the total surplus received by all members of society
7
Q
Equity
A
The fairness of the distribution of well-being among the members of society
