Econ 202 Test 2 Ch 7

Consumer surplus is

amount willing to pay - amount paid

Area below demand curve and above price measured

consumer surplus

A consumer's willingness to pay directly measures

how much a buyer values a good

Marginal buyer is the one who

leaves the market first if price raises

Efficiency in a market is achieved when

sum of producer and consumer surplus max

Economists typically measure efficiency using

total surplus

Producer surplus directly measures

well being of sellers

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

cost of production

At the equilibrium price of a good, the good will be purchased by those buyers who

value good more than price

A supply curve can be used to measure producer surplus because it reflects

sellers cost

Cost is the measure of the sellers

willingness to sell

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

zero