| A | B |
|---|
| command system | allocating resources by order of someone in authority |
| Consumer surplus | MB from good/service - P, summed over Q consumed |
| Producer surplus | P - MC, summed over Q produced |
| Total surplus | sum of PS and CS |
| Deadweight loss (DWL) | decrease in TS resulting from inefficient underproduction/overproduction |
| Transactions costs | opportunity costs of making trades in market |
| Utilitarianism | we should strive to achieve “the greatest happiness for the greatest number” |
| Big tradeoff | tradeoff btw efficiency & fairness recognizing cost of making income transfers |
| Price ceiling or price cap | govt regulation placing upper limit on P at which good/service/factor of production may be traded |
| Rent ceiling | regulation that makes illegal to charge more than specified rent for housing |
| Black market | illegal market operating alongside govt-regulated market |
| Search activity | time spent looking for someone w/whom to do business |
| Price floor | govt regulation placing lower limit on P @ which particular good/service/factor of production may be traded |
| Minimum wage law | govt regulation making hiring labor for less than specified wage illegal |
| Price Support | price floor in agricultural market maintained by govt guarantee to buy surplus output at that P |
| Subsidy | payment by govt to producer to cover part of cost of production |
