market eff Flashcards
What is market efficiency
Efficiency is producing goods and services that the society wants at the lowest possible cost
What is Consumer surplus
Consumer surplus is the difference between what a consumer is prepared to pay and what they actually pay in the market
Use it to measure the economic wellbeing for consumers
What is producer surplus
Producer surplus is the difference between what a producer is willing to receive and what they actually receive
What are consumer surplus shown
above the price, and below the demand curve.
What are producer surplus shown
It is the area that is below the price, and above the supply curve.
What is total surplus
Total surplus is a measure of economic efficiency
Measure of net benefits to society from the production and consumption of a good.
What are the aims of society and efficient markets?
To maximise the total surplus in every market
What is an efficient and inefficient market?
In an Efficient market , it is not possible to make someone better off without making someone else worse off
In an Inefficient market, it is possible to improve total well being in society by reallocating resources
what does consumer surplus measure
consumer surplus. It is the difference between what a consumer is prepared to pay and what they actually pay in the market.
what is deadweight loss
when total surplus is reduced because of either under or overproduction, it is referrred to deadweight loss
