Week 3- Consumers, Producers, and the Efficiency of Market Problem Set Flashcards Preview

Eco 201 > Week 3- Consumers, Producers, and the Efficiency of Market Problem Set > Flashcards

Flashcards in Week 3- Consumers, Producers, and the Efficiency of Market Problem Set Deck (12)
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1
Q

Efficiency-

A

When total surplus is maximized.

2
Q

Welfare economics-

A

Study how allocation of resources affect economic well-being.

3
Q

Consumer surplus-

A

Amount buyer willing to pay - amount buyer actually pay.

4
Q

Willingness to pay-

A

Measures the value that a buyer places on a good.

Ex: Each buyers has a minimum amount to bid.

5
Q

Market power-

A

Ability of market participants to influence price.

6
Q

Producer surplus-

A

Amount a seller is paid - cost of production.

7
Q

Total Surplus-

A

Consumer surplus + producer surplus.

8
Q

Externalities-

A

Side effects passed on to a party other than buyers and sellers.

9
Q

Seller’s opportunity cost measures-

A

value of everything she must give up.

10
Q

Normative analysis-

A

Being subjective, judging, theoretical scenarios.

11
Q

Marginal seller-

A

Seller who would leave market first if price were any lower.

12
Q

Marginal buyer-

A

Buyer who leave market first if price were any higher.