Section 4: Equilibrium and efficiency Flashcards
1
Q
Total welfare = ____ surplus + ____ surplus
A
consumer and producer
2
Q
What is a loss in social welfare called in economics?
A
Dead-weight loss
3
Q
Define Pareto Efficiency
A
In this state, it is impossible to make someone better off without making someone else worse off
4
Q
Define a Pareto improvement
A
An action that results in only benefits
5
Q
Define a potential Pareto improvement
A
An action that provides a net-benefit, so the benefits outweigh the costs
6
Q
What are some critiques of economic notions of efficiency?
A
- Based on wealth and income
- Challenges of monetization
- Preferences might be unknown or change
- Ignores equity impacts
