Chapter 7 - Chapter 7 Welfare economics: the study of how...

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Chapter 7 Welfare economics: the study of how the allocation of resources affects economic well- being Willingness to pay: the maximum amount that a buyer will pay for a good Consumer surplus: the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it Cost: the value of everything a seller must give up to produce a good Producer surplus: the amount a seller is paid for a good minus the seller’s cost of providing it Efficiency: the property of a resource allocation of maximizing the total surplus received by all members of society Equality: the property of distributing economic prosperity uniformly among the members of society Chapter 8 Deadweight loss: the fall in total surplus that results from a market distortion, such as a tax Chapter 12 Total revenue: the amount a firm receives for the sale of its output Total cost: the market value of the inputs a firm uses in production Profit: total revenue minus total cost Explicit costs: input costs that require an outlay of money by the firm Implicit costs: input costs that do not require an outlay of money by the firm
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This note was uploaded on 03/17/2011 for the course ECON 101 taught by Professor Buckles during the Spring '08 term at Vanderbilt.

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Chapter 7 - Chapter 7 Welfare economics: the study of how...

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