Chapter 7: Consumers, Producers, and the Efficiency of the Market

buyer is indifferent between buying the good and not buying it.

below the demand curve and above price.

below the price and above the supply curve

the seller's cost of production.

below the demand curve and above the supply curve, up to the equilibrium quantity.

the marketplace guiding the self-interests of market participants into promoting general economic well-being

market failure.

potentially remedy the problem and increase economic efficiency.

the study how the allocation of resources affects economic well-being Buyers and sellers receive benefits from taking part in the market. The equilibrium in a market maximizes the total welfare of buyers and sellers.

the maximum amount that a buyer will pay of a good

the amount a buyer is will to pay for a good minus the amount the buyer actually pays for it; its a good measure of economic well-being if policymakers respect the preferences of buyers

the benefit buyers receive from participating in a market; concept is to make judgments about the desirability of market outcomes.

the demand curve for a product; it reflects their willingness to pay The area below the demand curve and above the price measures the consumer surplus in the market

the buyer who would leave the market first if the price were any higher

the value of everything a seller must give up to produce a good

the amount a seller is paid for a good minus the seller's cost of providing it

the supply curve, The area below the price and above the supply curve measures the producer surplus in a market.

the seller who would leave the market first if the price was any lower

the sum of consumer and producer surplus

Value to Buyers - Amount paid by buyers

Amount received by Buyers - Cost to sellers

Value to Buyers - Cost to Sellers

the property of a resource allocation of maximizing the total surplus received by all members of society

the property of distributing economic prosperity uniformly among the members of society

Cannot increase economic well-being by: Changing the allocation of consumption among buyers Changing the allocation of production among sellers