ECON101 Lecture Notes - Lecture 9: Economic Surplus, Marginal Cost, Marginal Utility

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Corey Van De Waal

Document Summary

First firms to use it make economic profit. When a new technology becomes available, the atc and mc shift downward. Efficient allocation achieved when: consumers select points on their demand curves, producers select point on their supply curves, the sum of consumer surplus and producer surplus is mzximized. When marginal social benefit = marginal social cost. The pressures of competition force self-interested firms to produce incredible long run results: each firm produces at the lowest possible average total cost. At the minimum point of the long run average cost curve. Consumers pay the lowest possible price that keeps firms in business p = minimum atc: each firm uses the least-cost technology firms produce the efficient quantity price, which equals marginal benefit equals marginal cost. The forces of competition guide firms to produce output and charge prices that maximize the value of our scarce resources.