Competitive Market Equilibrium

Question 1

Community/social surplus refers to?

Answer 1

Community/social surplus refers to? The sum of consumer and producer surplus at a given market price and output, thereby maximising economic welfare.

Question 2

Importance of Community surplus and allocative efficiency

Answer 2

They are important economic tools to consider when discussing weyher economic decisions made increase or decrease economic welfare.

Question 3

What is allocative afficiency?

Answer 3

Social optimal situation that occurs when resources are distributed in such a way that consumers and producers get the maximum possible benefit.

Question 4

Define consumer surplus?

Answer 4

It refers to the gain or benefit to buyers who can purchase a product at a price lower than that which they are willing and able to pay.

Question 5

Producer surplus refers to?

Answer 5

The benefits to firms that can receive a higher price than the price they are willing and able to supply at.