Flashcards in Efficiency Deck (15)
Avoidable decrease in total surplus caused by a factor preventing the market from producing its optimal output
The difference between what the consumer was willing to pay and what they actually paid
Types of government intervention
Market restrictions, price control, tax, subsidies
Legislated maximum price below equilibrium
What is the intention of a price ceiling?
Consumer equity for accessibility to low income earners
Legislated minimum price
What is the aim of a price floor?
Support low income producers, often local agriculture
Compulsory contributions to government revenue
What are taxes levied upon?
Goods & services, income, profits
Determines the best way to implement tax money
Money provided by the government to help reduce costs of goods and services
Why are subsidies inefficient?
The cost is greater than total surplus
Limiting the supply of a good
Difference between willingness to receive and what they actually receive