MARKET EQUILIBRIUM Flashcards
what is consumer surplus?
difference between what consumers are willing to pay and what they do pay
what is DWL?
lost efficiency when the optimal quantity is not being produced
what is equilibrium?
when Qd = Qs and there is no shortage or surplus
what is marginal benefit?
the extra or additional benefit received from consuming one more unit of a good.
what is marginal cost?
the extra or additional cost of producing one more unit of output.
what is marginal utility?
the addition to total utility resulting from the consumption of one more unit of a good or service. ultimately all economic decisions are based on the perceived marginal utility of one more unit of a good.
what is a market?
any kind of arrangement where buyers and sellers of a particular good, service or resource are linked together to carry out an exchange.
what is pareto optimum?
cant make someone better off without making someone worse off
what is producer surplus?
different between the price and what sellers are willing to sell for
what is a rent cap/ control?
a legally imposed maximum price that landlords can charge for rent. this price is BELOW the market/equilibrium price for rent
what is a shortage?
the amount by which quantity demanded is greater than quantity supplied.
- excess demand
what is social/community surplus?
the total benefit or welfare to society of an economic transaction. It is equal to the sum of the consumer surplus and producer surplus
what is a surplus?
demand and supply: the extra supply that results when quantity is greater than quantity demanded.
consumer and producer surplus: the extra benefit consumers get by paying less for a good than the amount they are willing to pay, or the extra benefit producers get by receiving a higher price for the good they are selling than the price they are willing to receive.
- excess supply
