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Lecture 11

ECON 1000 Lecture 11: Week 6

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Department
Economics
Course
ECON 1000
Professor
Nick Rowe
Semester
Fall

Description
Econ 1000 – Week 6 – Lecture 11  Totalsurplus=Consumersurplus+ producersurplus  The marginalcoststo producebefore theequilibriumpricewillgenerally alwaysbe the lowest.  After the equilibriumpoint,producersgenerallystopproducingbecause the marginalcost hasgottentoo large to reallymake it worthit to producemore. Basicallytheopportunitycosthasgrown too large.  Competitivemarketsmaximizetotalsurpluses.OfBuyers andsellers o But theyignore thirdpartieseitherifthey’repositiveornegative outcomes.  Pareto Improvement:Makes (at least)onepersonbetter off,andnobody worse off.  Not-ParetoOptimal:Possibleto reallocateandmakea Pareto improvement  Pareto Optimal:Notpossibletoreallocateresourcesto create a Pareto improvement.  Competitivemarketsarea goodthingbecause theylead topareto optimalcircumstances. Butdistributionofresourcesand moniescan alsochange things.  But for now,competitivemarketsgenerallyleadto paretooptimal scenarios.  Singlebuyers andse
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