Micro chp. 7 test 2
The "invisible hand" is a concept developed by Adam Smith to describe the virtues of free markets. used to describe the welfare system in the United States. a term used by some economists to characterize the role of government in an economy — inevitable but invisible. a concept used by J.M. Keynes to describe the role of government in guiding the allocation of resources in the economy.
a concept developed by Adam Smith to describe the virtues of free markets.
Market power refers to the side effects that may occur in a market. ability of market participants to influence price. forces of supply and demand in determining equilibrium price. government regulations imposed on the sellers in a market.
ability of market participants to influence price.
Laissez-faire is a French expression which literally means to make do. whatever works. allow them to do. to get involved.
allow them to do
Producer surplus measures the price that buyers are willing to pay for sellers' output of a good or service. benefit to sellers of producing a greater quantity of a good or service than buyers demand. benefits to sellers of participating in a market. costs to sellers of participating in a market.
benefits to sellers of participating in a market.
Which tools allow economists to determine if the allocation of resources determined by free markets is desirable? the equilibrium price and quantity incomes of and prices paid by buyers profits and costs to firms consumer and producer surplus
consumer and producer surplus
Total surplus is equal to the total cost to sellers minus the total value to buyers. equal to consumers' willingness to pay plus producers' cost. greater than the sum of consumer surplus plus producer surplus. equal to producer surplus plus consumer surplus.
equal to producer surplus plus consumer surplus.
Consumer surplus is the amount a consumer is willing to pay minus the amount the consumer actually pays. is the amount of a good that a consumer can buy at a price below equilibrium price. is the number of consumers who are excluded from a market because of scarcity. measures how much a seller values a good.
is the amount a consumer is willing to pay minus the amount the consumer actually pays.
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it maximizes the combined welfare of buyers and sellers. maximizes both the total revenue for firms and the quantity supplied of the product. minimizes costs and maximizes output. minimizes the level of welfare payments.
maximizes the combined welfare of buyers and sellers.
Willingness to pay measures the value that a buyer places on a good. is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
measures the value that a buyer places on a good.
Producer surplus directly measures the well-being of sellers. unsold inventories. production costs. excess demand.
the well-being of sellers.
The study of how the allocation of resources affects economic well-being is called willingness-to-pay economics. macroeconomics. consumer economics. welfare economics.
welfare economics.