Macro Chapter 3 Flashcards
ceteris paribus
A latin term “all other things are constant”, assuming everything is equal.
Complements
two goods that joint together during consumption.
Consumer Surplus
The difference between the maximum price a buyer is willing and able to pay for a good or service and the price actually paid.
Deadweight Loss
A loss of economic efficiency when the equilibrium is not achieved
Demand
The willings and ability for consumers to buy a certain good or service
Equalibrum
Where the supply and demand curve meet
Equilibrium Price
The price where the supply and demand curve meet
Equilibrium Quantity
the quantity in which the supply and demand curve meet
Excess Demand
the leftover demand
Excess Supply
the leftover supply
Inferior Good
when you make more money and don’t have to buy McDonnell’s anymore. Mcodnalds is the inferior good
Price Ceiling
When the government puts a max price on a good or service
Substitute
two goods that can be used for the same purpose
Surplus
The amount left over after a certain requirement has been achieved
Why do economists use the ceteris paribus assumption?
So they can designate what they believe to be correct about two variables
Tarrif
Tax on imported goods
Tarrif
Tax on imported goods
What is the relationship between total surplus and
economic efficiency?
when total surplus is maximized, the economy experience economic efficiency. Total surplus gets maximized when both consumer and producer is maximum.
What is the relationship between total surplus and
economic efficiency?
when total surplus is maximized, the economy experience economic efficiency. Total surplus gets maximized when both consumer and producer is maximum.
Consumer, total, producer surplus
Producer: the extra benefit producers receive from selling a good or service, measured by the price the
producer actually received minus the price the producer would have been willing to accept
Consumer:he extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid
Total: The sum of consumer and producer
What is the relationship between total surplus and
economic efficiency?
When total surplus is maximized, the economy experience economic efficiency. Total surplus gets maximized when both consumer and producer is maximum.
