Microeconomics: Potter UNG. Test 2.

The Difference between the price a consumer is willing and able to pay for an additional unit of a good and the price the consumer actually pays; for the whole market, it is the sum of all the individual consumer surpluses

The difference between what a producer is paid for a good and the cost of producing that unit of the good; for the market, it is the sum of all the individual sellers' producer surpluses- the area above the market supply curve and below the market price

The cost of producing one more unit of a good

the sum of consumer and producer surpluses

Net loss of total surplus that results from an action that alters a market equilibrium

the gains and losses associated with government intervention in markets

a benefit or cost from consumption or production that spill over onto those who are not consuming or producing the good

When BENEFITS spill over to an outside party who is not involved in producing or consuming the good.

When Cost spills over to an outside party who is not involved in consuming or producing the good

Changing incentives so people will take into account the effects of the external costs/benefits imposed on, or enjoyed by others

where property rights are defined in a clear-cut fashion, and externalities are internalized if transaction costs are low

Non-rivalrous consumption, Non-excludable

Rivalrous consumption, excludability

Rivalrous, and non-excludability

Deriving benefits from something not paid for

When the available information is initially distributed in favor of one party relative to another in an exchange

A situation where an informed party benefits in an exchange by taking advantage of knowing more than the other party

Taking additional Risks because you are insured, thus lowering the cost to you of taking those risks

A Consumer's switch to another similar good when the price of the preferred good increases

Reduction in quantity demanded of a good when its price increases because of a consumer's decreased purchasing power

a measure of the relative levels of satisfaction consumers get from consumption of goods and services

One unit of Satisfaction

Total amount of satisfaction derived from the consumption of a certain number of goods or services

Extra satisfaction generated by consumption of a an additional good or service during a specific time period

The concept that states that as an individual consumes more and more of a good, each successive unit generates less and less utility (satisfaction)

Allocation of consumer income that balances the ration of marginal utility to the price of goods purchased

A field of economics that incorporates insights from human psychology into the models of economic behavior

Tax on imported goods

a legal limit on the imported quantity of a good that is produced abroad and can be sold in domestic markets