Chapter 4: Economic Efficiency, Government Price Setting, and Taxes Flashcards Preview

ECON W1105 Principles of Economics > Chapter 4: Economic Efficiency, Government Price Setting, and Taxes > Flashcards

Flashcards in Chapter 4: Economic Efficiency, Government Price Setting, and Taxes Deck (11)
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1
Q

price ceiling

A

a legally determined maximum price that sellers may charge

2
Q

price floor

A

a legally determined minimum price that sellers may receive

3
Q

consumer surplus

A

the difference between the highest price a consumer is willing to pay for a good or service and the price the consumer actually pays

4
Q

marginal benefit

A

the additional benefit to a consumer from consuming one more unit of a good or service

5
Q

marginal cost

A

the additional cost to a firm of producing one more unit of a good or service

6
Q

producer surplus

A

the difference between the lowest price a firm would be willing to accept for a god or service and the price it actually receives

7
Q

economics surplus

A

the sum of consumer surplus and producer surplus

8
Q

deadweight loss

A

the reduction in economic surplus resulting from a market not being in competitive equilibrium

9
Q

economic efficiency

A

a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum

10
Q

black market

A

a market in which buying and selling take place at prices that violate government price regulations

11
Q

tax incidence

A

the actual division of the burden of a tax between buyers and sellers in a market