economics 4

  1. consumer surplus
    difference between highest price a consumer is willing and able to pay and the price actually payed.
  2. marginal benefit
    extra benefit to a consumer from consuming an additional unit of a good (derives demand)
  3. producer surplus
    difference between lowest price a firm is willing to recieve and the price actaully recieved. area above the supply curve and below equillibrim
  4. marginal cost
    additional cost to a firm producing an additional unit of output.
  5. economic surplus
    sum of consumer surplus and producer surplus; most economically efficient.
  6. permenant disequillibrium prices
    fixed at a level above or below natural equilibrium
  7. dead weight loss
    reduction in economic surplus resulting from a market not being in equilibrium.
  8. price floor
    fixed at level above equillibrium
  9. price ceiling
    fixed at level below equilibrium
  10. machine model
    adam smith, economy a self-regulating machine
  11. butterfly model
    chaos theory
  12. phillips curve
    uneployment and inflation inversely related
  13. common errors of thought
    • fallacy of composition (false claim, good for one good for all)
    • association-is-causation (after the fact therefore becuase of the fact)
    • ignoring secondary effects
  14. why economists disagree
    • problem of data
    • problem of complexity
    • human behavior
Card Set
economics 4
chapter 1 and 4