Economics chapter 4

When the government imposes price floor or price ceilings

1) some people win 2) Some people lose 3)there is a loss of economic efficiency

Price ceiling

A legally determined maximum price that sellers may charge

Black market

A market in which buying and selling take place at prices that violate government price regulations

Economic efficiency

A market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximim

Economic Surplus in a market is the sum of____surplus and___surplus. In competitive market, with many buyers and sellers and no government restrictions, economic surplus is at a ____ when the market is in____.

Consumer; producer; maximum; equilibrium

Consumer and producer surplus measure_____Benefit rather than the____benefit

Net; Total

Marginal benefit

The additional benefit to a consumer for consuming one more unit of good or service

Marginal cost

The additional cost to a firm of producing one more unit of good or service

Consumer surplus

The difference between the highest price a consumer is willing to pay for a good or service and the price the consumer actually pays

Economic Surplus

The sum of consumer surplus and producer surplus

Price floor

a legally determined minimum price that sellers may recieve

Tax incidence is

the actual division of the burden of a tax between buyers and sellers in a market

Producer Surplus

the difference between the lowest price a firm would be willing to accept for a good or service and the price it actually reveives