Comsumer And Producer Surplus Flashcards
Individual consumer surplus
The net gain to an individual buyer from the purchase of a good. It is equal to the difference between the buyer’s willingness to pay and price paid
Total consumer surplus
Sum of the individual consumer surpluses of all the buyers of a good in the market
Consumer surplus
Used to refer both to individual and total consumer surplus
Cost
Lowest price at which the seller is willing to sell a good
Individual producer surplus
Net gain to an individual from selling a good. It is equal to the difference between the price received and sellers cost
Total producer surplus
Sum of the individual producer surpluses of all sellers of a good in a market
Producer surplus
Refers both to the individual and the to total producer surplus
Total surplus
Total net gain to consumers and producers from trading in the market. It is the sum of the producer and consumer surplus
Property rights
Rights of owners of valuable items, whether resources of goods, to dispose of those items as they choose
Economic signal
Any piece of information that helps people make better economic signals
Insufficient (market or economy)
If there are any missed opportunities: some people could be better off without making other people worse off
Market failure
Occurs when a market fails to be efficient
Willingness to pay
Maximum price a consumer will buy a good
