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.