Chapter 3 Flashcards Preview

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Flashcards in Chapter 3 Deck (10):
1

Transfer

surplus that moves from producers to consumers, or vice versa, as a result of a regulation

2

Deadweight loss (DWL)

the reduction in total surplus that occurs as a result of a market inefficiency

3

Nonbinding Price Ceiling

a price ceiling set at a level above the equilibrium market price

4

Nonbinding Price Floor

a price floor set at a level below the equilibrium market price

5

Quota

a regulation that sets the quantity of a good or service provided

6

Rule of Tax Incidence and Elasticities

The more elastic curve (supply or demand) bares the least burden (producer or consumer)

7

Share of Tax Borne by Consumer

Elasticity of Supply/Elasticity of Supply + IElasticity of DemandI

8

Share of Tax Borne by Producer

IElasticity of DemandI / /Elasticity of Supply + IElasticity of DemandI

9

Subsidy

a payment by the government to a buyer or seller of a good or service

10

Price Received by Sellers after Subsidy

Pb + subsidy