Chapter 5 Flashcards
(11 cards)
1
Q
big tradeoff
A
tradeoff between efficiency and fairness
2
Q
command system
A
allocating resources by order of authoritarian
3
Q
consumer surplus
A
excess benefit over amount paid; 1/2(MB-P)(Q)
4
Q
deadweight loss
A
measure of inefficiency; decrease in total surplus from inefficiency
5
Q
market failure
A
market delivers an inefficient outcome
6
Q
producer surplus
A
excess received form sale over production cost; 1/2 (P - MC)(Q)
7
Q
symmetry principle
A
similar situations should be treated similarly
8
Q
total surplus
A
consumer surplus + producer surplus; 1/2 (MB - MC)(Q)
9
Q
transactions costs
A
opportunity costs of making trades
10
Q
utilitarianism
A
most happiness for most people
11
Q
maximin principle
A
poorest person as well off as possible
