Week 4 - supply, demand and government policies, market efficiency and costs of taxation Flashcards
1
Q
What is consumer surplus
A
the difference between the highest price a consumer is willing to pay and the price the consumer pays
2
Q
what is producer surplus
A
the difference between the lowest a price a firm would have been willing to accept and the price it actually receives
3
Q
equilibrium in a competitive market creates what?
A
economically efficient level of output where MB=MC
4
Q
what is price floor
A
a legally determined minimum price that sellers may receive
5
Q
where is the price floor found on a supply and demand curve?
A
above the equilibrium price
6
Q
what is price ceiling
A
a legally determined maximum price that sellers may receive
7
Q
where is the price ceiling found on a demand and supply curve?
A
below the equilibrium price
