Microeconomics Chapter 7 Key
Concepts
Welfare Economics - answersthe study of how the allocation of resources affects
economic well-being
Willingness to pay - answersthe maximum amount that a buyer will pay for a good
Consumer Surplus - answersA buyer's willingness to pay minus the amount the buyer
actually pays
cost - answersthe value of everything a seller must give up to produce a good
producer surplus - answersthe amount a seller is paid for a good minus the seller's cost
efficiency - answersthe property of a resource allocation of maximizing the total surplus
received by all members of society
equity - answersthe fairness of the distribution of well-being among the members of
society
Concepts
Welfare Economics - answersthe study of how the allocation of resources affects
economic well-being
Willingness to pay - answersthe maximum amount that a buyer will pay for a good
Consumer Surplus - answersA buyer's willingness to pay minus the amount the buyer
actually pays
cost - answersthe value of everything a seller must give up to produce a good
producer surplus - answersthe amount a seller is paid for a good minus the seller's cost
efficiency - answersthe property of a resource allocation of maximizing the total surplus
received by all members of society
equity - answersthe fairness of the distribution of well-being among the members of
society
