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Microeconomics > Efficiency Quiz > Flashcards

Efficiency Quiz Flashcards

1
Q

maximum prices consumers are willing to pay minus the price that they actually pay for that quantity

A

consumer surplus

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2
Q

consumer surplus+ producer surplus

A

total surplus

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3
Q

total surplus is a measure of

A

market efficiency

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4
Q

price received for a good minus the minimum price that the supplier was willing to sell the good for

A

producer surplus

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5
Q

quantity sellers are willing to offer of a good at each price, lowest P value

A

supply

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6
Q

actual price received by sellers in a market

A

Pa

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7
Q

additional cost of each unit of a good

A

marginal costs based on opportunity cost

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8
Q

maximum price at which a consumer would buy a good

A

willingness to pay

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9
Q

net gain to an individual buyer from that purchase of a good, equal to buyer’s willingness to pay minus the price paid

A

individual consumer surplus

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10
Q

sum of all individual consumer surpluses of all the buyers of a good in a market

A

total consumer surplus

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11
Q

where is total consumer surplus on a graph

A

area below the demand curve but above the given price

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12
Q

lowest price at which a seller is willing to sell a good

A

seller’s cost

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13
Q

net gain to an individual seller from selling a good, equal to the difference between the price received and the seller’s cost

A

individual producer surplus

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14
Q

sum of all the individual producer surpluses of all of the sellers of a good in a market

A

total producer surplus

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15
Q

where is total producer surplus on a graph

A

area above the supply curve but below the given price

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16
Q

buyers and sellers meet at a specific price that benefits both

A

mutual gains

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17
Q

when the total surplus is maximized in a market, the market is

A

efficient

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18
Q

as the price goes up, consumer surplus

A

decreases

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19
Q

as the price goes down, consumer surplus

A

increases

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20
Q

as the price goes up, producer surplus

A

increases

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21
Q

as the price goes down, producer surplus

A

decreases

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22
Q

decrease in equilibrium quantity causes decrease in total surplus

A

deadweight (social) loss

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23
Q

market transactions are the

A

total surplus

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24
Q

how to reduce total surplus

A

prevent any sale that would have occurred

25
Q

efficient markets allocate goods to consumers who

A

are willing to pay the most, value the good the most

26
Q

efficient markets allocate sales to sellers who

A

have the lowest prices, most value the right to sell the good

27
Q

efficient markets ensure that every consumer values the good

A

more than the seller

28
Q

efficient markets ensure that anyone who does not buy a good values it

A

less than the seller

29
Q

rights of owners of valuable items to dispose of them as they chose

A

property rights

30
Q

any piece of information that helps people make better economic decisions

A

economic signal

31
Q

when some people could be made better off without making other people worse off

A

inefficient

32
Q

type of market failure, when a firm can change the market price alone

A

market power

33
Q

type of market failure, when actions have effects on the welfare of others

A

externalities

34
Q

type of market failure, when there are incomplete property rights

A

public goods and common resources

35
Q

type of market failure, when there is wasted valuable human capital due to opinions

A

discrimination

36
Q

caveats to market efficiency

A
  1. may not be fair/equitable
  2. only efficient under certain conditions (property rights, economic signals)
  3. not every individual is happy
37
Q

side effects of actions that impose costs on or provide benefits for others but do not have an economic incentive to take these into account

A

externalities

38
Q

additional cost imposed on society as a whole by an additional unit of externality

A

marginal social cost

39
Q

additional gain to society as a whole by an additional unit of an externality

A

marginal social benefit

40
Q

quantity of an externality that society would choose if all the costs and benefits of it were fully accounted for

A

socially optimal quantity

41
Q

uncompensated cost that an individual or firm imposes on others

A

negative externality

42
Q

uncompensated benefit that an individual or firm imposes onothers

A

positive externality

43
Q

payment designed to encourage activities that yield external benefits

A

pigouvian subsidy

44
Q

external benefit that results when knowledge spreads among individuals and firms

A

technology spillover

45
Q

good that supplier can prevent people who do not pay for it from consuming it

A

excludable good

46
Q

when a unit of a good cannot be consumer by more than one person at a time

A

rival in consumption

47
Q

good that a supplier cannot prevent consumption by people who do not pay for it

A

nonexcludable good

48
Q

when more than one person can consume the same unit of a good at the same time

A

nonrival in consumption

49
Q

excludable and rival in consumption

A

private good

50
Q

nonexcludable and nonrival in consumption

A

public good

51
Q

nonexcludable and rival in consumption

A

common resources

52
Q

excludable and nonrival in consumption

A

artificially scarce good

53
Q

with a nonexcludable good, when individuals are not willing to pay for their own consumption and instead add on to anyone who does pay

A

free-rider problem

54
Q

with common resources, individual uses a good until their marginal benefit of its use is equal to their own marginal cost, ignoring that this depletes the amount of the resource remaining for others

A

overuse

55
Q

when not everyone has all the information

A

asymetrical information

56
Q

demonstrates what is happening with the internal costs/benefits

A

private curve

57
Q

demonstrates internal and external costs/benefits

A

social curve

58
Q

as long as there are no externalities, an activity will continue as long as the marginal benefits

A

are greater than the marginal costs

59
Q

for the last unit of a good that is produced

A

marginal benefit equals marginal costs

Microeconomics (7 decks)

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