Quiz #4 Vocab Flashcards Preview

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Flashcards in Quiz #4 Vocab Deck (14):
0

The optimal distribution of goods and services considering consumer preferences; P=MC

Allocative Efficiency (socially optimal)

1

Goods and services are received by those who value them most; consumer utility is maximized such that MUa:Pa=MUb/Pb

Distributive efficiency

2

Optimal production, the firm cannot produce more output with the same level of inputs or the same output with less inputs; MPI/wage=MPk/Rental rate

Productive efficiency (least cost combination of resources)

3

Quantity demanded will rise when income rises and fall when income falls

Normal goods

4

Quantity demanded will fall when income rises and ride when income falls

Inferior goods

5

How the quantity demanded for one good changes when the price of a related good changes; positive for subs, negative for complements

Cross price elasticity

6

Sensitivity of quantity demanded to changes in income; positive for normal goods, negative for inferior goods

Income elasticity

7

The increase in consumer satisfaction from consuming one more of a given good or service

Marginal utility

8

Total satisfaction from consumption of a good or service

Total utility

9

Benefit consumers get from paying less for a good or service than they are willing to pay; area above equilibrium but below demand curve

Consumer surplus

10

Benefit to producers from selling a good or service for more than what they are willing to sell; area below equilibrium but above supply curve

Producer surplus

11

Loss to society when markets are made inefficient; a waste of surplus or benefit that could be avoided

Deadweight loss

12

Goods made to be used together as one; P of good A and QD for comp go in opposite directions

Complementary goods

13

Goods used in place of one another; P of good A and QD for sub go in the same direction

Substitute goods