Chapter 4 Terms

Willingness to Pay

A consumer's _____ _____ _____ for a good is the maximum price at which he or she would buy that good.

Inefficient

A market or an economy is _____ if there are missed opportunities: some people could be made better off without making other people worse off.

Cost

A seller's _____ is the lowest price at which he or she is willing to sell a good.

Economic Signal

An _____ _____ is any piece of information that helps people make better economic decisions.

Producer Surplus

Economists use the term _____ _____ to refer both to individual and to total producer surplus.

Total Surplus

The _____ _____ generated in a market is the total net gain to consumers and producers from trading in the market. It is the sum of the producer and the consumer surplus.

Consumer Surplus

The term _____ _____ is often used to refer to both individual and to total consumer surplus.

Total Producer Surplus

_____ _____ _____ in a market is the sum of the individual producer surpluses of all the sellers of a good in a market.

Individual Consumer Surplus

_____ _____ _____ is the net gain to an individual buyer from the purchase of a good. It is equal to the difference between the buyer's willingness to pay and the price paid.

Individual Producer Surplus

_____ _____ _____ is the net gain to an individual seller from selling a good. It is equal to the difference between the price received and the seller's cost.

Total Consumer Surplus

_____ _____ _____ is the sum of the individual consumer surpluses of all the buyers of a good in a market.

Property Rights

_____ _____ are the rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose.

Market Failure

_____ _____ occurs when a market fails to be efficient.