LS 13- Consumer & Producer Surplus Flashcards
What is consumer surplus?
This is the extra amount of money that a consumer is willing to pay for a good compared to what they actually pay.
Link: https://www.economicshelp.org/blog/glossary/consumer-surplus/
What is producer surplus?
This is the extra amount of money paid to producers, above the minimum amount that they are willing to accept.
Link: https://www.economicshelp.org/blog/glossary/consumer-surplus/
What is the incidence of a tax?
It measures the burden of a tax upon both consumers and producers.
Who takes the burden of the tax when demand is elastic?
Producers
Who takes the burden of a tax when demand is inelastic?
Consumers
What is the incidence of a subsidy?
A measure of how gains of a subsidy are distributed between consumers and producers
Who gains the most in a subsidy when demand is elastic?
Producers
Who gains the most in a subsidy when demand is inelastic?
Consumers
