Macroeconomics Chapter 7

willingness to pay

At an auction each person, has in mind a maximum amount that he will bid. This maximum is called __________.

total surplus is maximized

Efficiency is attained when

normative analysis

An example of ________is studying whether equilibrium outcomes are socially desirable.

marginal buyer

In a market the_______ is the buyer who would be the first to leave the market if the price were any higher.

efficiency

It is attained when total surplus is maximized.

externalities.

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Producer surplus

What is the amount a seller is paid minus the cost of production OR the amount received by sellers - Costs of sellers.

seller's opportunity cost

What measures the value of everything a seller must give up to produce a good.

Producer surplus = Total surplus - Consumer surplus

Which of the following illustrates the producer surplus equation?

Welfare economics

is the study of how the allocation of resources affects economic well-being.

Consumer surplus

_______equals the value to buyers minus the amount paid by buyers.

Total surplus

______is equal to producer surplus plus consumer surplus.