Flashcards in Week 3- Consumers, Producers, and the Efficiency of Market Problem Set Deck (12):
When total surplus is maximized.
Study how allocation of resources affect economic well-being.
Amount buyer willing to pay - amount buyer actually pay.
Willingness to pay-
Measures the value that a buyer places on a good.
Ex: Each buyers has a minimum amount to bid.
Ability of market participants to influence price.
Amount a seller is paid - cost of production.
Consumer surplus + producer surplus.
Side effects passed on to a party other than buyers and sellers.
Seller's opportunity cost measures-
value of everything she must give up.
Being subjective, judging, theoretical scenarios.
Seller who would leave market first if price were any lower.