Comparative Advantage: ACDC Econ

The video tutorial introduces key economic concepts using the market for Santa hats as an example. It explains supply and demand, consumer and producer surplus, and market equilibrium. The video also discusses the effects of price ceilings and floors, leading to deadweight loss and market inefficiencies. A bonus section uses Christmas shopping to illustrate deadweight loss when gifts are not valued by recipients.

What is consumer surplus?

• The difference between the highest and lowest price a product is sold for.

• The total cost of production for a producer.

• The extra cost a consumer pays when buying a product.

• The amount a consumer saves when buying a product at a lower price than they are willing to pay.

What happens when a price ceiling is set below the equilibrium price?

• It leads to a surplus of goods.

• It causes a shortage of goods.

• It has no effect on the market.

• It increases the producer surplus.

How does a price floor affect the market?

• It decreases the equilibrium price.

• It has no impact on consumer surplus.

• It leads to a surplus of goods.

• It creates a shortage of goods.

What is deadweight loss?

• The loss of efficiency when the market is not in equilibrium.

• The extra cost paid by consumers.

• The total profit made by producers.

• The difference between supply and demand.

How can gift-giving during Christmas lead to deadweight loss?

• It increases the demand for unwanted goods.

• It has no effect on the market.

• It decreases the supply of goods.

• It causes a surplus of cash.