ECN E102 Lecture Notes - Lecture 24: Marginal Utility, Market Failure, Opportunity Cost
Document Summary
The market fails to allocate resources efficiently because property rights are not well established: some item of value does not have an owner with the legal authority to control it. In all cases, if the policy is well planned and well run, it can make the allocation of resources more efficient and thus raise economic well-being. Ultimate goal is to derive the supply curve, which is based primarily on the costs of production. Costs of production have two components: the physical productivity of the production process (inputs related to output, the prices for the input factors (land, labour, capital) Total revenue, total cost, and profit quantity of output the firm produces times the price at which it sells its output. The goal of a firm is to maximize profit. Total revenue (for a firm): the amount a firm receives for the sale of its output; Total cost: the market value of the inputs a firm uses in production.
