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Definition
| An excess of quantity demanded over quantity supplied. |
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| an excess of quantity supplied over quantity demanded |
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| a legal minimum below which the price charged for a commodity is not permitted to fall |
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| a legal maximum above which the price charged for a commodity is not permitted to rise |
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Definition
| In a perfect competitive economy (with no externalities) the equilibrium is efficient. |
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| Perfectly competitive economy |
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Definition
- large number of buyers and sellers
- no externalities
- homogenous products
- perfect information
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Definition
| is the difference between the reservation price (how much you're willing to pay) and the market price. |
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| area limited by the D curve and the market price line |
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| Producer surplus of a seler |
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Definition
| the difference between the market price and her prdouction cost. |
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Definition
| the area limited by the S curve and the market price line |
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| Consumer surplus + producer surplus + government surplus |
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Definition
| An externality occurs when an individual does not bear the full benefit/cost of their actions. |
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Definition
| is the share of an activity's marginal benefit that is received by the people who can carry out the activity |
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Definition
| is the sum of MPB plus its incidental benefits that are received by others and for which those others don't pay. |
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Definition
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| the slope of an activity's marginal cost that is paid by the persons who carry out the activity |
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Definition
| is the sum of MPC plus its incidental costs that are borne by others who realize no compensation for the resulting usage to their will being. |
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Definition
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Definition
| the cost of an input whose quantity does not rise when output goes up |
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Definition
| a cost whose total amount changes when the quantity of output of the supplier changes |
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Definition
| the total cost divided by the quantity produced |
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Definition
| the increase in total cost that arises from the production of an additional unit |
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Definition
| you must incur the fixed cost even if you do not produce |
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Definition
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Term
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Definition
| fixed cost plus the total variable cost |
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Term
Formulas for Costs TC AVC AC |
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Definition
FC + TVC TVC/Q TC/Q ▲TVC ▲ TC |
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Definition
| is the total output produced given same inputs |
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Definition
| the total product divided by the number of units used of a single input |
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Term
| marginal product is the increase of total product obtained as a result of increasing that input in one unit, taking as given the remaining inputs quantities |
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Definition
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Term
| the law of diminishing marginal returns |
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Definition
| states that the marginal product of one additional unit of the input decreases as the number of units increases |
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Definition
| the amount of money a firm receives from selling its product (total revenue) minus the amount it must pend to make and market the good (total cost) |
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