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