Flashcard #1 Review, June 24th, Summer Economics 2025

Front

What is producer surplus?

Back

Producer surplus is the difference between what producers are willing to accept for a good or service and the actual price they receive. It represents the benefit to producers from selling at a market price higher than their minimum acceptable price.

Front

What does a movement along the supply curve indicate?

Back

A movement along the supply curve indicates a change in the quantity supplied due to a change in the price of the good or service.

Front

What is opportunity cost?

Back

Opportunity cost is the value of the next best alternative that is forgone when making a decision. It represents the benefits that could have been received by choosing that alternative.

Front

How is consumer surplus defined?

Back

Consumer surplus is the difference between what consumers are willing to pay for a good or service and the actual price they pay. It measures the benefit to consumers from purchasing at a lower price.

Front

What does a decrease in quantity demanded mean?

Back

A decrease in quantity demanded refers to a situation where consumers buy less of a good or service due to an increase in its price, while all other factors remain constant.

Front

What is the law of demand?

Back

The law of demand states that, all else being equal, as the price of a good or service decreases, the quantity demanded increases, and vice versa.

Front

What is a technological advancement in production?

Back

A technological advancement in production refers to improvements in the methods or processes used to produce goods, which can lead to lower production costs and increased efficiency.

Front

What does the term 'marginal cost' refer to?

Back

Marginal cost is the additional cost incurred by producing one more unit of a good or service. It is crucial for determining optimal production levels.

Front

What is the significance of the equilibrium price?

Back

The equilibrium price is the price at which the quantity of a good demanded by consumers equals the quantity supplied by producers. It is the point where the market clears.

Front

What does a shift in the supply curve indicate?

Back

A shift in the supply curve indicates a change in supply due to factors other than price, such as changes in production costs, technology, or number of suppliers.