EXAM 1\ Flashcards
Total benefit
is the money that people pay + the consumer surplus they receive
marginal benefit
the maximum amount that a person is willing to pay for something
midpoint formula price
new price - old price/ (old price + new price)/ 2
Midpoint formula for quantity
(Old q-new)/((old q + new q )/2)
Perfect elasticity
almost zero change in price brings a huge change in quanity supplied
The price elasticity of demand.
a measure of the responsiveness of the quantity demanded of a a good to a change in this price when all other influences remain the same
marginal benefit and cost lines
the demand curve is a marginal benefit curve and the supply curve is a marginal cost curve
Consumer surplus
The excess of marginal benefit from a good over the price paid for it, summed over the quantity consumed.
Producer surplus
The excess of the price of a good over the marginal cost of producing it, summed over the quantity produced.
The Coase theorem
the proposition that if property rights exist and the cost of enforcing them are low, then the market outcome is efficient and it doesn’t matter who has the property rights
marginal cost
the cost added by producing one additional unit of a product or service
TC
the cost of all the factors of production the firm uses (2parts)
Total fixed cost
Total variable cost
