Efficiency and equity
3 important questions on Efficiency and equity
What is the definition of consumer surplus?
excess of the benefit received from a good over the amount paid for it.
calculated by: (price willing to pay - actual price x quantity)/2
calculated by: (price willing to pay - actual price x quantity)/2
What determines a market failure?
a situation in which delivers an inefficient outcome, namely; under- or overproduction
What is a deadweight loss?
the decrease in the total surplus when there is an inefficient outcome. Also called social loss.
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