Economics: Chapter 4- Consumer and Producer Surplus
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.
individual consumer surplus
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.
total consumer surplus
The sum of the individual consumer surpluses of all the buyers of a good in a market. Equal to the area below the demand curve, but above the price.
total producer surplus
The sum of the individual producer surpluses of all the sellers of a good in the market. Equal to the area above the supply curve but below the price.
economic signal
any piece of information that helps people make better economic decisions
market failure
occurs when a market fails to be efficient
producer surplus
refers to both individual and total producer surplus
consumer surplus
refers to individual and consumer surplus
cost
the lowest price at which a seller is willing to sell their good
willingness to pay
the maximum price at which a consumer is willing to buy a good
individual producer surplus
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
property rights
the rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose
total surplus
the total net gain to consumers and producers from trading in the market. It is the sum of the producer and the consumer surplus.