Supply demand allocative efficiency quiz

Define the term demand

• the various quantities of a good

  that consumers (or a consumer) are not able to

  buy at different possible prices during a particular time

  period, ceteris paribus (all other things being equal).

• the various quantities of a good

  that consumers (or a consumer) are willing and able to

  buy at different possible prices during a particular time

  period, ceteris paribus (all other things being equal).

• the various quantities of a good

  that consumers (or a consumer) are not willing and able to

  buy at different possible prices during a particular time

  period.

• the various quantities of a good

  that consumers (or a consumer) are willing to

  buy at different possible prices during a particular time

  period, ceteris paribus (all other things being equal).

Define the term Supply

• Indicates the various quantities of a good that

  firms (or a firm) are not able to produce and

  sell at different possible prices during a particular time

  period, ceteris paribus (all other things being equal).

• Indicates the various quantities of a good that

  firms (or a firm) are willing and able to produce and

  sell at different possible prices during a particular time

  period.

• Indicates the various quantities of a good that

  firms (or a firm) are willing and able to produce and

  sell at different possible prices during a particular time

  period, ceteris paribus (all other things being equal).

• Indicates the various quantities of a good that

  firms (or a firm) are not willing to produce and

  sell at different possible prices during a particular time

  period, ceteris paribus (all other things being equal).

Define the term Utility.

• A subjective concept, it is the satisfaction that

  consumers gain from consuming something.

• A subjective concept, it is the satisfaction that

  producers gain from consuming something.

• A subjective concept, it is the satisfaction that

  consumers gain from making something.

• A subjective concept, it is the satisfaction that

  producers gain from making something.

Define the term allocative efficiency

• An over-allocation of resources that

  results in producing the combination and quantity of

  goods and services mostly preferred by consumers. The

  condition for allocative efficiency is given by MSB =

  MSC (marginal social benefit = marginal social cost or

  P= MC (price is equal to marginal cost); alternatively it

  is when social surplus is maximum.

• An under-allocation of resources that

  results in producing the combination and quantity of

  goods and services mostly preferred by consumers. The

  condition for allocative efficiency is given by MPC =

  MSC (marginal private cost = marginal social cost or

  P= MC (price is equal to marginal cost); alternatively it

  is when social surplus is maximum.

• An allocation of resources that

  results in consuming a combination and quantity of

  goods and services mostly preferred by producers. The

  condition for allocative efficiency is given by MSB =

  MSC (marginal social benefit = marginal social cost or

  P= MC (price is equal to marginal cost); alternatively it

  is when social surplus is maximum.

• An allocation of resources that

  results in producing the combination and quantity of

  goods and services mostly preferred by consumers. The

  condition for allocative efficiency is given by MSB =

  MSC (marginal social benefit = marginal social cost or

  P= MC (price is equal to marginal cost); alternatively it

  is when social surplus is maximum.

Define the term consumer surplus

• Refers to the difference between the

  highest prices consumers are willing to pay for a good

  and the price actually paid. In a diagram, it is shown by

  the area under the demand curve and above the price

  paid by consumers up to quantity purchased

• Refers to the difference between the

  lowest prices consumers are willing to pay for a good

  and the price actually paid. In a diagram, it is shown by

  the area under the demand curve and above the price

  paid by consumers up to quantity purchased

• Refers to the difference between the

  highest prices consumers are willing to pay for a good

  and the price actually paid. In a diagram, it is shown by

  the area over the demand curve and above the price

  paid by consumers up to quantity purchased

• Refers to the difference between the

  highest prices consumers are willing to pay for a good

  and the price they did not pay. In a diagram, it is shown by

  the area under the demand curve and above the price

  paid by consumers up to quantity purchased

Define the term producer surplus

• Refers to the difference between

  the price received by firms for selling their good and

  the lowest price they are willing to accept to produce

  the good. In a diagram, it is shown as the area above

  the price received by producers and under the supply

  curve up to the quantity sold.

• Refers to the difference between

  the price received by firms for selling their good and

  the lowest price they are willing to accept to consume

  the good. In a diagram, it is shown as the area under

  the price received by producers and above the supply

  curve up to the quantity sold.

• Refers to the difference between

  the price received by firms for selling their good and

  the highest price they are willing to accept to produce

  the good. In a diagram, it is shown as the area under

  the price received by producers and above the supply

  curve up to the quantity sold.

• Refers to the difference between

  the price received by firms for selling their good and

  the lowest price they are willing to accept to produce

  the good. In a diagram, it is shown as the area under

  the price received by producers and above the supply

  curve up to the quantity sold.

Define the term excess supply.

• In the context of demand and supply,

  occurs when the quantity of a good demanded is

  larger than the quantity supplied, leading to a surplus;

  see surplus.

• In the context of demand and supply,

  occurs when the quantity of a good demanded is

  smaller than the quantity supplied, leading to a surplus;

  see surplus.

• In the context of demand and supply,

  occurs when the quantity of a good demanded is

  smaller than the quantity supplied, leading to a shortage;

  see shortage.

• In the context of demand and supply,

  occurs when the production of a good demanded is

  smaller than the quantity supplied, leading to a surplus;

  see surplus.