BSB113 Lecture Notes - Marginal Cost, Takers, Externality
Document Summary
Supply curve - quantity that a firm supplies to the market at a given price. Market supply - sum of the supplies of all firms active on a market. Excess demand - demand is larger than supply, usually because price is too low. Excess supply - supply in a market is larger than demand, usually the price is too high. Pareto efficiency - an allocation is pareto efficient if no member of a society can be made better off without making at least one member worse off. Consumption possibilities - the set of possible combinations of goods an economic unit can choose the goods it wants to consume from. Consumer surplus - the benefit that consumers derive from market interaction. Producer surplus - the benefit that all producers derive from market interaction. Market equilibrium is an efficient allocation - perfect markets are efficient because they maximise the sum of producer and consumer surplus.
