Welfare Economics Flashcards
Deadweight loss measures the loss
in a market to buyers and sellers that isn’t offset by an increase in government revenue
A tax on a good
gives buyers an incentive to buy less of the good than they otherwise would buy
When a tax is placed on the buyers of a product, a result is that buyers effectively pay
more than before the tax and sellers receive less than before the tax
When a tax is levied on buyers of a good
a wedge is placed between the price buyers pay and the price sellers effectively receive
In a market, the marginal buyer is the buyer
who would be the first to leave the market if the price were any higher
What happens to consumer surplus if the price of a good increases`
consumer surplus decreases
if allocations of resources are efficient the market
is in equilibrium
