50: Efficiency and deadweight loss

Question 1

total surplus

Answer 1

consumer + producer surplus, total net gain to trading in a market

Question 2

efficient

Answer 2

when there is no way to make some people better off without making others worse off

Question 3

functions of an efficient market (4)

Answer 3

1) allocates consumption to most willing to pay
2) allocates sales to those with the lowest cost
3) ensures every consumer values the good more than the seller
4) ensure every not-buyer values the good less than the not-seller

Question 4

progressive tax

Answer 4

tax that raises more in proportion to income

Question 5

regressive tax

Answer 5

tax that rises less in proportion to income

Question 6

proportional tax

Answer 6

rises in proportion to income

Question 7

excise tax

Answer 7

tax on sales of a particular good or service

Question 8

tax incidence

Answer 8

distribution of tax burden on consumers vs sellers

Question 9

deadweight loss equation

Answer 9

decrease in total surplus - tax revenue

Question 10

administrative costs

Answer 10

resources used by govt to collect tax and by taxpayers to pay it

Question 11

lump-sum tax

Answer 11

tax that is the same for all, regardless of any actions people take (no deductibles)