Consumer surplus occurs when the price consumers pay for a product or service is less than the price they are willing to pay.
Consumer surplus is based on the economic theory of marginal utility, which is the additional satisfaction a consumer receives from one more unit of a good or service.
Consumer surplus always increases when the price of a good falls and decreases when the price of a good rises.
Economists visualize it as a triangular area under the demand curve between the market price and what consumers would be willing to pay.
Consumer surplus plus producer surplus equals total economic surplus.
An economist is an expert who studies the relationship between a society’s resources and its production or output, using a number of different indicators to predict future trends.
An absolute advantage is when a manufacturer can provide a greater quantity of a product or service for the same price or the same quantity at a lower price than its competitors.
Animal spirits come from the Latin spiritus animalis: “breath that awakens the human mind.” It was introduced by the British economist John Maynard Keynes in 1936.
Autarky refers to a state of self-sufficiency and is commonly used to describe countries or economies that seek to reduce their dependence on international trade.
Automatic Stabilizers is a permanent government policy that automatically adjusts tax rates and transfers payments in a way that stabilizes income, consumption, and business spending over the business cycle.
The balance of trade (BOT) is the difference between the value of a country’s imports and exports over a given period and is the largest component of a country’s balance of payments (BOP).
“Best Effort” is a legal term that represents the obligation of a party to a contract to take all possible steps to fulfill the terms of the agreement.