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Microeconomics Chap 7
Consumers, Producers, and the Efficiency of Markets
7
Economics
Undergraduate 1
10/11/2012

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Term
welfare economics
Definition
the study of how the allocation of resources affects economic well-being
Term
willingness to pay
Definition
the maximum amount that a buyer will pay for a good
Term
consumer surplus
Definition
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
Term
cost
Definition
the value of everything a seller must give up to produce a good
Term
producer surplus
Definition
the amount a seller is paid for a good minus the seller's cost of providing it
Term
efficiency
Definition
the property of a resource allocation of maximizing the total surplus received by all members of society
Term
equality
Definition
the property of distributing economic prosperity uniformly among the members of society
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