Assignment #4

on a. graph, consumer surplus is represented by the area

below the demand curve and above the price

When a buyer's willingness to pay for a good is equal to the price of the good, the

buyer is indifferent between buying the good and not buying it

the "invisible hand" refers to

the marketplace guiding the self-interests of market participants into promoting general economic well-being

consumer surplus

is measured using the demand curve for a product

market power

ability to influence prices by a single, or a very small number of buyers and sellers

producer surplus is the

amount a seller is paid minus the cost of production

A consumers willingness to pay directly measures

how much a buyer values a good

market power and externalities are examples of:

market failure

when market fails, public policy can

potentially remedy the problem and increase economic efficiency

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

sellers cost of production

cost is the measure of the

sellers willingness to sell

consumer surplus is

the amount a buyer is willing to pay for a good minus the buyer actually pays for it