| Scarce resources are; | often referred to as limited resources, are resources that are finite and not abundant enough to satisfy all the wants and needs of people. |
| Scare resources might be allocated by; | o Market price.
o Command.
o Majority rule.
o Contest.
o First-come, first-served.
o Lottery.
o Personal characteristics.
o Force. |
| what is Consumer surplus? | Is an economic concept that refers to the difference between the maximum amount that a consumer is willing to pay for a good or service and the actual price that they pay. |
| what does consumer surplus represent? | It represents the value that consumers receive from a transaction over and above what they paid for it. |
| what is the producer surplus? | Producer surplus is an economic concept that refers to the difference between the price that producers receive for a good or service and the minimum price they are willing to accept for it. |
| what does the producer surplus represent? | It represents the benefit that producers receive from a transaction over and above the cost of producing the good or service. |
| how to calculate the producer surplus? | Producer surplus is the (actual) price of a good minus the minimum-supply price (marginal cost), summed over the quantity sold. |
| How to measure producer surplus? | by the area below the market price and above the supply curve, summed over the quantity sold |
| It is the extra benefit from receiving a higher price. | producer surplus |
| What is deadweight loss? | Occurs when there is an inefficiency in the market, leading to a loss of economic welfare. This inefficiency means that total surplus (the sum of consumer and producer surplus) is not maximized. |
| Common causes of deadweight loss include: | Taxes and subsidies
Monopolies
Price floor
Price ceiling |
| what does deadweight loss represent? | the lost opportunities for trade and the inefficient allocation of resources. |
| When underproduction occurs the deadweight loss appears on the .... of the equilibrium | left side |
| When overderproduction occurs the deadweight loss appears on the .... of the equilibrium | right side |
| what sort of loss is a deadweight loss | social loss |
