Class Notes (838,343)
Canada (510,861)
Economics (298)
ECON 1000 (235)
Nick Rowe (65)
Lecture 14

ECON 1000 Lecture 14: Week 8

2 Pages
79 Views
Unlock Document

Department
Economics
Course
ECON 1000
Professor
Nick Rowe
Semester
Fall

Description
Econ 1000 – Week 8 – Lecture 14  2 cases when markets fail o When there is too much market power, like a monopoly. A market will fail when market power is too centralized. o Or when there is only one consumer buying. o Externalities can also lead to market failure o Externality: The private cost (supply curve represents this) also adds an external cause through relation of production.  Social cost = private cost + external cost  The Market equilibrium, is the original equilibrium point (point of intersection) on a supply and demand chart.  Market equilibriums are generally not social optimum.  Social optimum is when the marginal cost is the same as the private cost.  Social cost is when the marginal cost is the external cost added to the private cost.  The new equilibrium point with the social cost curve becomes the social optimum point.  The net welfare loss is the triangle between the two equilibrium points lined up on the q axis.  Self-interest leads to a pareto optimal market, sometimes.  The elasticity of the social cost curve depends on the elasticity of both demand and supply.  Negative externality is where the b
More Less

Related notes for ECON 1000

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit