A situation that occurs in a market when the price is such that the quantity that consumers wish to buy is exactly balanced by the firms wish to supply.
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Comparative Static Analysis
Examines the effect on equilibrium of a change in the external conditions affecting a market.
2 of 7
Consumer Surplus
The value that consumers gain from consuming a good or service over and above the price paid.
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Marginal social benefit (MSB)
The additional benefit that society gains from consuming an extra unit of a good.
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Producer surplus
The difference between the price received by firms for a good or service and the price at which they would have been prepared to supply that good or service.
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Marginal Cost
The cost of producing an additional unit of output.
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Allocative efficiency
Achieved when society is producing an appropriate bundle of goods relative to consumer preference.
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Other cards in this set
Card 2
Front
Examines the effect on equilibrium of a change in the external conditions affecting a market.
Back
Comparative Static Analysis
Card 3
Front
The value that consumers gain from consuming a good or service over and above the price paid.
Back
Card 4
Front
The additional benefit that society gains from consuming an extra unit of a good.
Back
Card 5
Front
The difference between the price received by firms for a good or service and the price at which they would have been prepared to supply that good or service.
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