KEY TERMS
ceteris paribus All other things being equal
consumer surplus the extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid
deadweight loss the loss in social surplus that occurs when a market produces an inefficient quantity
economic surplus see social surplus
equilibrium the situation where quantity demanded is equal to the quantity supplied; the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change
equilibrium price the price where quantity demanded is equal to quantity supplied
equilibrium quantity the quantity at which quantity demanded and quantity supplied are equal for a certain price level
excess demand at the existing price, the quantity demanded exceeds the quantity supplied; also called a shortage
excess supply at the existing price, quantity supplied exceeds the quantity demanded; also called a surplus
price what a buyer pays for a unit of the specific good or service
price ceiling a legal maximum price
price control government laws to regulate prices instead of letting market forces determine prices
price floor a legal minimum price
producer surplus the extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept
shortage at the existing price, the quantity demanded exceeds the quantity supplied; also called excess demand
social surplus the sum of consumer surplus and producer surplus
surplus at the existing price, quantity supplied exceeds the quantity demanded; also called excess supply
total surplus see social surplus