Market Efficiency – Flashcards
Unlock all answers in this set
Unlock answersquestion
the difference between the price producers receive for a good or a service and the minimum price they are willing and able to accept is producer...
answer
surplus
question
all else held constant, at higher prices producer surplus increases for two reasons:
answer
- the higher price may now make it possible for more firms to sell the product - everyone who was already going to sell the product gets a higher price, so they get more producer surplus than before.
question
producing output at the lowest possible total cost per unit of production is:
answer
productive efficiency
question
the difference between the maximum price consumers are willing and able to pay for a good or a service and the price they actually pay is the...surplus.
answer
consumer
question
producing output at the lowest possible total cost of production per unit is...efficiency.
answer
productive
question
all else held constant, at lower prices consumer surplus increases for two reasons:
answer
- everyone who was already going to buy the product gets a break on the price, so they get more consumer surplus than before. - lower prices may now make it possible for more people to buy the product.
question
producer surplus is the:
answer
difference between the price producers receive for a good or a service and the minimum price they are willing and able to accept.
question
when calculating...surplus for an individual firm, subtract the firm's willingness to accept from the market place.
answer
producer
question
producing the goods and services that consumers most want in such a way that the marginal benefit equals the marginal cost is:
answer
allocative efficiency
question
when a market is not allowed to adjust to the equilibrium price and quantity traded, some economic...will be lost.
answer
surplus
question
a branch of economics that focuses on measuring the welfare of market participants and how changes in the market change their well-being is known as:
answer
welfare economics
question
the difference between the maximum price consumers are willing and able to pay for a good or a service and the price they actually pay is the consumer...
answer
surplus
question
when the marginal benefit of the last unit equals the marginal cost of the last unit, production is...efficient.
answer
allocatively
question
...surplus is maximized when markets are in equilibrium.
answer
total
question
when a market is not allowed to adjust to the equilibrium price and quantity traded, some economic...will be lost.
answer
surplus
question
when calculating consumer surplus for an entire market:
answer
calculate the area below the demand curve and above the equilibrium price, from zero to quantity traded.
question
equilibrium in a market occurs where:
answer
demand and supply intersect.
question
gains from trade in the market are maximized when:
answer
the equilibrium price is such that the quantity demanded equals the quantity supplied.
question
a person will purchase a good or service so long as the person's:
answer
willingness to pay (marginal benefit) is greater than the marginal cost.
question
you paid $25 for a concert ticket and received a consumer surplus of $10. you were willing to pay $...
answer
$35
question
graphically, consumer surplus is the area below the demand curve and above the equilibrium price, from...to the quantity traded.
answer
zero
question
...welfare is not maximized if the amount of output produced is greater than the equilibrium quantity.
answer
social
question
graphically, total...surplus is the entire area between the supply and demand curves, from a quantity of zero to the quantity traded.
answer
economic
question
deadweight loss is the:
answer
value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium.
question
graphically, producer surplus is the area above the...curve and below the equilibrium price, from...to the quantity traded.
answer
supply, zero
question
when calculating producer surplus for the market:
answer
calculate the area above the supply curve and below the equilibrium price, from zero to the quantity traded.
question
the...is the area below the demand curve and above the equilibrium price, from zero to the quantity traded
answer
consumer surplus
question
a maximum legal price at which a good, a service, or a resource can be sold is a price...
answer
ceiling
question
the difference between economic surplus when the market is at its competitive equilibrium and economic surplus when the market is not in equilibrium is the:
answer
deadweight loss
question
if low prices are the result of government intervention:
answer
- overall consumer surplus can increase or decrease - some consumers will be worse off because they cannot purchase or a service - some consumers will be better off because they can buy a good or a service at a lower price
question
if an economy is producing on the production possibilities frontier, the economy is:
answer
getting as much output as possible from its resources
question
a minimum legal price at which a good, a service, or a resource can be sold is a price...
answer
floor.
question
a person will purchase a good or service so long as the person's willingness to pay is greater than the...
answer
price
question
with a binding price ceiling,...always lose.
answer
producers
question
in terms of the production possibilities curve, allocative efficiency means that at any point in time:
answer
an ideal combination of production is based on consumer preferences.
question
when marginal benefit equals marginal cost, the market is allocatively efficient and is therefore maximizing economic...in that market.
answer
surplus
question
graphically, producer surplus is the area above the supply curve and below the equilibrium price, from...to the quantity traded.
answer
zero
question
allocative...refers to producing the goods people want most
answer
efficiency
question
allocative and productive efficiency occur when the equilibrium...is such that the quantity demanded equals the quantity supplied.
answer
price
question
if production exceeds equilibrium quantity:
answer
resources are being wasted
question
which of the following is true?
answer
allocative efficiency means there is no deadweight loss.
question
consumer surplus:
answer
can increase or decrease as a result of a price ceiling
question
...losses occur when too much or too little output gets produced.
answer
deadweight
question
if production exceeds the equilibrium quantity:
answer
more output is being produced than the amounts that consumers want at the equilibrium price.
question
...efficiency means producing the level of output at which the marginal benefit of the last unit is equal to the marginal cost of that unit.
answer
allocative
question
the difference between the price producers receive for a good or a service and the minimum price they are willing and able to accept is producer...
answer
surplus
question
the quantity traded times the tax equals:
answer
the tax revenue from a tax
question
you received $250 for a stationary bike and had a producer surplus of $50. you were willing to accept $...
answer
$200 producer surplus is the difference between the price at which a firm sells its good or service, and the minimum price it would have been willing to accept. $50 = $250 - $X
question
if high prices are the result of government intervention:
answer
- some producers will be better off because they can sell a good or a service at a higher price - some producers will be worse off because they cannot sell a good or service - overall producer surplus can increase or decrease
question
a tax on suppliers shifts the:
answer
supply curve up vertically
question
deadweight loss is the:
answer
value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium
question
graphically, producer surplus is the area above the...curve and below the equilibrium price, from...to the quantity traded.
answer
supply, zero
question
...surplus will always be less with a binding price floor than without.
answer
consumer
question
producer surplus can increase or decrease as a result of a price floor, depending on how much the price is force to:
answer
increase and how much the quantity supplied rises.
question
producers may gain a little, but society as a whole will be worse off with a price floor because of the...losses.
answer
deadweight
question
the difference between the economic surplus when the market is at its competitive equilibrium and the economic surplus when the market is not in equilibrium is the:
answer
deadweight loss
