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Microecon
Chapter 4 vocab
| Term | Definition |
|---|---|
| Willingness to pay | maximum price at which a consumer would buy a certain good |
| Individual consumer surplus | net gain to an individual buyer from the purchase of a good; equal to difference between the buyer's willingness to pay and price paid |
| Total consumer surplus | sum of the individual consumer surpluses of all the buyers of a good in a market |
| Consumer surplus | used to refer to both individual and to total consumer surplus |
| Cost | the lowest price at which he or she is willing to sell a good |
| Individual producer surplus | net gain to an individual seller from selling a good; equal to difference between price received and seller's cost |
| Total producer surplus | sum of the individual producer surpluses of all the sellers of a good in a market |
| Producer surplus | refers both to individual and to total producer surplus |
| Total surplus | total net gain to consumers and producers from trading in the market; sum of the producer and consumer surplus |
| Property rights | rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose |
| Economic signal | any piece of information that helps people make better economic decisions |
| Inefficient | a market or an economy is this if there are missed opportunities: some people could be made better off without making other people worse off |
| Market failure | occurs when a market fails to be efficient |
Created by:
David55900
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