chapter 7

  1. the sum of consumer and producer surplus
    social surplus
  2. directs consumers and producers to maximize their surplus 
    -  leads to the highest level of social welfare
    the individual hand
  3. is measured by the area below the demand curve and above the equilibrium price line.
    Consumer surplus
  4. is found as the area above the supply curve and below the equilibrium price
    Producer surplus
  5. is simply the sum of consumer surplus and producer surplus.
    Social surplus
  6. A​ non-market price imposition is a
    price control
  7. In the figure on the​ right, the imposition of price Upper P Subscript Upper CPC results in a ___ in the market
  8. If the imposed price Upper P Subscript Upper CPC were​ removed, market forces would rectify the mismatch between quantity demanded and quantity supplied by pushing the price
  9. This price adjustment would eliminate the mismatch by ___ market participants to change their behavior.
  10. Reservation value of a buyer reflects her​ ________.
    willingness to pay for a good or service
  11. The marginal cost and total revenue of a firm are​ $5 and​ $275, respectively. The reservation value of the seller in this case is
  12. In a perfectly competitive​ market, if the market price is lower than the average total cost of​ production:
    existing firms will leave the market.
Card Set
chapter 7