AREC365 Lecture Notes - Lecture 2: Prentice Hall, Thermodynamic System, Allocative Efficiency

• School: University of Alberta
• Department: Agricultural and Resource Economics
• Course: AREC365
• Professor: Terence Veeman

Document Summary

Arec 365 lecture notes sept 11 and 14. *the globe and its economy is not strictly a closed system, since the sun is the long-run source of. Referring to allocative efficiency: we"re looki(cid:374)g at this i(cid:374) static terms (as opposed to dynamic, which includes allocation to the future) Technical efficiency (physical measure) is the other component of efficiency that the text does not consider. Efficiency (price or allocative efficiency: maximize the economic surplus (net benefits) Equity: who benefits and who bears the cost. Recall deter(cid:373)i(cid:374)a(cid:374)ts of de(cid:373)a(cid:374)d (cid:894)(cid:449)hat"s i(cid:374)cluded i(cid:374) the regular de(cid:373)a(cid:374)d fu(cid:374)ctio(cid:374)(cid:895) So qd = f(pown , psub, pcomp, y, t) qd = f(p) However what we graph is p = f(qd) so this is technically an inverse demand function. Demand curve can also be referred to as: Cmv competitive market value = price actually paid for the good (qdxp*) Twtp = cs + cmv = cs + (qdxp*)