Social Welfare

Question 1

Total amount of economic well-being that a group (buyers and sellers) of people receive from an outcome

Answer 1

Social Welfare

Question 2

Markets are usually a good way to organize economic activity
Rational people make decisions at the margin

Answer 2

Two Principles of Social Welfare and Market outcomes

Question 3

The amount of economic well-being that all the buyers in a market receive as a result of the market outcome

Answer 3

Consumer Surplus

Question 4

How to find Consumer Surplus ?

Answer 4

The value Buyers place on consuming (Q) units minus what they pay for the (Q) units

Question 5

Maximum amount that the buyers are willing to pay for (Q) units

Answer 5

Total Willingness To Pay

Question 6

Maximum amount buyers in a market are willing pay to give up for 1 additional unit of the good (they already have (Q) units)

Answer 6

Marginal Willingness To Pay

Question 7

When the Margin is (1 unit) the marginal willingness to pay formula is ?

Answer 7

TWTP(Q) minus TWTP(Q-1)

Question 8

How do you find the TWTP equilibrium point ?

Answer 8

TWTP(Q-1) + MWTP (Q)

Question 9

• When the Price that corresponds to a particular Qd=Q^ is MWTP at Q units for a infinitesimally small additional amount of the good
• TWTP(Q) is equal to the area underneath the demand curve and to the left (Q^)

Answer 9

When Q is continuous - linear demand curve

Question 10

Minimum amount sellers in a market are willing to accept for Q units ?

Answer 10

Total Willingness To Sell

Question 11

What it costs sellers to produce Q units ?

Answer 11

TWTS(Q)

Question 12

For graphs what is represented as the area beneath the demand curve to the left of Qd(P^) and above (P^)

Answer 12

Consumer Surplus - For a given Price

Formula - (Qd(P^) X (P^)

Question 13

Total Willingness to Sell(Q) is the minimum amount sellers in a market are willing to accept in exchange for Q units - total cost to sellers of producing Q uits

Answer 13

Producer Surplus

Question 14

The Price that corresponds to a particular (Qs=Q^) known as the cost to sellers of producing a small additional amount of the good if they have already produced Q^ units

Answer 14

Continuous Quantities (Q)

Question 15

For Graphs what is represented as the area beneath the sellers and to the left of (Q)?

Answer 15

TWTS(Q)

Question 16

What is the formula for profit sellers receive ?

Answer 16

Total revenue to sellers minus total cost to sellers

Question 17

For graphs what is represented as the area above the supply and to the left of the quantity supply ?

Answer 17

Profit for Sellers

Question 18

Consumer Surplus (Qe,Pe) + Profit to Sellers (Qe,Pe,) equals ?

Answer 18

Social Welfare (Qe,Pe,)

Question 19

If a market is competitive and no externalities exist then the market outcome is ______________ which maximizes social welfare.

Answer 19

Socially Efficient

Question 20

The equilibrium of supply and demand maximizes the sum of ?

Answer 20

Consumer and Producer Surplus

Question 21

For a graph what represents the area below price and above the supply curve ?

Answer 21

Producer Surplus

Question 22

Markets do not allocate resources efficiently in the presence of market failures such as ?

Answer 22

Market Power or Externalities

Question 23

If the market is competitive and no externalities exist the the market out come is ?

Answer 23

Socially Efficient

Question 24

With no externalities Economic Policies like price controls and per unit taxes will ?

Answer 24

Reduce Social Welfare

Question 25

With externalities Economic Policies like price controls and per unit taxes will ?

Answer 25

Increase Social Welfare

Question 26

The inability of some unregulated markets to allocate resources efficiently is ?

Answer 26

Market Failure