Surplus Flashcards
0
Q
consumer surplus
A
net benefit to all consumers
-
1
Q
efficiency
A
relates to the use of resources
- a market is said to be efficient when surplus is maximised (total surplus)
2
Q
producer surplus
A
- net benefit received by consumers
- want to maximise producer surplus
3
Q
inefficient markets
A
- markets with price and quantity restrictions
- taxes and firms with subsidies
- market power and externalities
4
Q
dead weight loss
A
- decrease in total surplus that results from an inefficient allocation of resources
5
Q
externality
A
- an intended / unintended consequence of an action
6
Q
negative externality
A
- e.g. truck is taking goods to be sold, cost is petrol
7
Q
positive externality
A
- school and learning
- positive externality is greater productivity, whole of society benefits
8
Q
rationing system
A
- what and how much to produce
- how to produce
- for whom to produce
- is it efficient?
- is it far?
9
Q
efficiency types
A
- technical efficiency
- cost of production
- allocative efficiency
- resources used to make products that are not wanted
10
Q
equity
A
- concept related to the distribution of products between different members of society
11
Q
horizontal equity
A
- no discrimination between people whose economic characteristics and performance are equal
12
Q
vertical equity
A
- different treatment of different people in order to reduce the differences between peole
13
Q
conditions required for the effective operation of price mechanism
A
no informational gaps no side effects no monopoly - good motives - no free riders or non exclusive products
