Microeconomics 9

The Analysis of Competitive Markets

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Flashcards	11
Language	English
Category	Macro-Economics
Level	University
Created / Updated	17.11.2012 / 13.03.2015
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welfare effects

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Gains and losses to consumers and producers.

deadweight loss

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Net loss of total (consumer plus producer) surplus

welfare benefit

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consumer + producer surplus measure the welfare benefit of a competitive market

economic efficiency

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Maximization of aggregate consumer and producer surplus

market failure

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Situation in which an unregulated competitive market is inefficient because prices fail to provide proper signals to consumers and producers.

2 reasons for market failure

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- Externalities (Action taken by prod. or cons. which affects other parties but isn't in the market price)

- Lack of information

price support

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Price set by government above free-market level and maintained by governmental purchases of excess supply.

import quota

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Limit on the quantity of a good that can be imported.

tariff

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Tax on an imported good.

specific tax

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Tax or a certain amount of money per unit sold.

subsidy

Payment reducing the buyer's price below the seller's price; i.e., a negative tax.

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Microeconomics 9

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