Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
consumer surplus producer surplus total surplus deadweight loss market failure asymmetric information laissezfaire price ceiling misallocation of resources price floor | The difference between market price and what consumers (as individuals or the market) would be willing to pay. It is equal to the area above market price and below the demand curve When markets fail to provide the socially optimal level of output, and will provide output at too high or low a price The difference between market price and the price at which firms are willing to supply the product. It is equal to the area below market price and above the supply curve A government set maximum price that can be charged for a product or service. When the price ceiling is set below equilibrium, it leads to shortages Occurs when one party to a transaction has significantly better information than another party A government set minimum price that can be charged for a product or service. When the price floor is set above equilibrium, it leads to surpluses Occurs when a good or service is not consumed by the person who values it the most, and typically results when a price ceiling creates an artificial shortage in the market A market that is allowed to function without any government intervention The sum of consumer surplus and producer surplus, and a measure of the overall net benefit gained from a market The reduction in total surplus that results from the inefficiency of a market not in equilibrium |