Term
|
Definition
| the maximun price at which a consumer would buy that good |
|
|
Term
| individual consumer surplus |
|
Definition
| the net gain to an individual buyer from the purchase of a good. it is equal to the difference betweeen the buyers willingness to pay and the price paid |
|
|
Term
|
Definition
| the sum of the individual consumer surpluses of all the buyers of a good in a market |
|
|
Term
|
Definition
| refers to both individual and to total consumer surplus |
|
|
Term
|
Definition
| the lowest price at which he or she is willing to sell a good |
|
|
Term
| individual producer surplus |
|
Definition
| 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 |
|
|
Term
|
Definition
| the sum of the individual producer surpluses of all the sellers of a good in a market |
|
|
Term
|
Definition
| refers to both individual and to total producer surplus |
|
|
Term
|
Definition
| the total net gain to consumers and producers from trading in the market. it is the sum of the producer and the consumer surplus |
|
|
Term
|
Definition
| the rights of the owners of valuable items, whether resources or goods, to dispose of those items as they choose |
|
|
Term
|
Definition
| any peice of information that helps people make better economic decisions |
|
|
Term
|
Definition
| market is considered ths if there are missed opportunities; some peole could be made better off without making other people worse off |
|
|
Term
|
Definition
| occurs hen a market fails to be efficient |
|
|
Term
|
Definition
| legal restrictions on high or low a market price may go; it can take two forms-price ceiling or price floor |
|
|
Term
|
Definition
| maximun price sellers are allowed to charge for a good or service |
|
|
Term
|
Definition
| minimum price buyers are required to pay for a good or service |
|
|
Term
|
Definition
| the loss in total surplus that occurs whenever an action or a policy reduces the quanity transacted below the efficient market equilibrium quanity |
|
|
Term
| inefficient allocation to consumers |
|
Definition
| people who want the good badly and are willing to pay a high price dont get it, and those who are relatively little about the good are only willing to pay a low price do get it |
|
|
Term
|
Definition
| people expand money, effort, and time to cope with the shortages caused by the price ceiling |
|
|
Term
| inefficiently low quality |
|
Definition
| sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price |
|
|
Term
|
Definition
| market in which goods or services are brought and sold illegally-either because it is illegal to sell thm at all or because the prices charged are legally prohibited by a price ceiling |
|
|
Term
|
Definition
| the legal floor on the wage rate, which is the market or price of labor |
|
|
Term
| inefficient allocation of sales among sellers |
|
Definition
| those who would be willing to sell the good at the lowerst price are not always those who actually manage to sell it |
|
|
Term
| inefficiently high quality |
|
Definition
| sellers offer high-quality goods at high price, even though buyers would prefer a lower quality at a lower price |
|
|
Term
|
Definition
| an upper limit on the quantity of some good that can be bought of sold. the total amount of th good that can be legally transacted is the QUOTA LIMIT |
|
|
Term
|
Definition
| gives its owner the right to supply a good |
|
|
Term
|
Definition
| the price at which consumers will demand that quantity |
|
|
Term
|
Definition
| the price at which producers will supply that quantity |
|
|
Term
|
Definition
| the price paid by the buyers ends up being higher than that received by sellers |
|
|
Term
|
Definition
| the earning that accrue to the license-holder from ownership of the right to sell the good |
|
|
Term
| price elasticity of demand |
|
Definition
| the ratio of the percent change in the quantity demanded to the percent change in the price as we move along the demand curve (dropping the minus sign) |
|
|
Term
|
Definition
| a technque for calculating the percent change. in this approach we calculate changes in a variable compared with the average or midpoint of the starting and final values |
|
|
Term
|
Definition
| when the quantity demanded foes not respond at all to changes in the price. when demand is perfectly inelastic, the demand curve is a vertical line |
|
|
Term
|
Definition
| when any price increase will cause the quantity demanded to drop to zero. when demand is perfectly elastic, the demand curve is a horizontal line |
|
|
Term
|
Definition
| the price elasticity if demand is greater that 1 |
|
|
Term
|
Definition
| if the price elasticity of demand is exactly 1 |
|
|
Term
|
Definition
| if the price elasticity of demand is less than 1 |
|
|
Term
|
Definition
| the total value of sales of a good or service. it is equal to the price multiplied by the quantity sold |
|
|
Term
| cross-price elasticity of demand |
|
Definition
| between 2 goods measures the effect o the change in one good's price on the quantity demanded of th other good |
|
|
Term
| income elasticity of demand |
|
Definition
| the percent change in the quantity of a good demanded when a consumer's income changes divided by the percent change in the consumers income |
|
|
Term
|
Definition
| if the income elasticity of demand for that good is greater than 1 |
|
|
Term
|
Definition
| if the income elasticity of demand for that good is positive but less than 1 |
|
|
Term
| price elasticity of supply |
|
Definition
| a measure of the responsiveness of the quantity of a good supplied to the price of that good |
|
|
Term
| perfectly inelastic supply |
|
Definition
| when the price elasticity of supply is zero, so that changes in the price of the good have no effect on the quantity supplied |
|
|
Term
| perfectly inelastic supply |
|
Definition
| when evven a tiny increase or reduction in the price will lead to very large changes in the quantity supplied so that the price elasticity is infinate |
|
|
