economics 4

difference between highest price a consumer is willing and able to pay and the price actually payed.

extra benefit to a consumer from consuming an additional unit of a good (derives demand)

difference between lowest price a firm is willing to recieve and the price actaully recieved. area above the supply curve and below equillibrim

additional cost to a firm producing an additional unit of output.

sum of consumer surplus and producer surplus; most economically efficient.

fixed at a level above or below natural equilibrium

reduction in economic surplus resulting from a market not being in equilibrium.

fixed at level above equillibrium

fixed at level below equilibrium

adam smith, economy a self-regulating machine

chaos theory

uneployment and inflation inversely related

• 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

• problem of data
• problem of complexity
• human behavior