Flashcards in Chapter 7 Microeconomics Exam 3 Deck (20):
What is an example of an Externalitie
A factory pollutes a lake
This is a negative externality for swimmers
because they have no control over the factory
What the seller gives up to produce a good
What 3 things does the amount of deadweight loss depend on?
Price elasticity of demand
Price elasticity of supply
Amount of tax per unit
Spreading prosperity uniformly
Consumer Surplus Calculation
buyers willingness to pay minus the market price
Willingness to Pay
Maximum amount a buyer wants to pay
What are 2 examples of market failure
Benefits consumers gain from participating in the market
The affects of allocating resources for others well being
Dead Weight Loss
Total surplus that results from tax
Producer Surplus Calculation
Market price minus the cost of production
What is the tax revenue formula?
Tax per unit x Quantity
Where is the market price on the graph?
The equilibrium (where supply and demand meet)
Demand is the same as
What does producer surplus measures?
Benefits that sellers get when participating in a market
When price falls consumer surplus...
Willingness to sell is another word for ----- ----.
Supply is the same as