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Description
Flashcards by Hayle Short, updated more than 1 year ago
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Created by Hayle Short
over 5 years ago
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| Question | Answer |
| income effect | As price falls, the real income of consumes rises. |
| substitution effect | As the price of a good or service falls, more customers are able to pay, so they are more likely to buy the good over a substitute. |
| consumer surplus | benefits to buyers who are able to produce a product for less than they are willing to do |
| producer surplus | difference between the price that firms actually receive and the price that they are willing and able to supply at |
| Allocative Efficiency | when resources are distributed so that consumers and producers get maximum possible benefit |
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