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Lecture

Ch.12 lecture notes

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Department
Economics
Course
ECO100Y5
Professor
Michael H O
Semester
Winter

Description
CH.12 Productive Efficiency 1. Produce given output with minimum input (produce at lowest cost) 2. Marginal Cost must be equal for all firms making industry more efficient Allocative Efficiency MC = P All Efficient ↑ Many Firms ↑ Industry (also efficient)Efficient IndustEfficient Industretc….. ↑ ↑ ↑ ↑ ↑ ↑ ↑ ↑ ↑ ↑ Effiecient Economy ( if all industry’s in economy are efficient then economy will too be efficient) Regulation → price ceiling ***Set price ceiling at level which MC=Demand Curve Effective D →P1 Ɣ 1 D Marginal Revenue from 0 to Q1 = P1 Max Profit →MR = MC ↓ Ɣ1 →Q MV=MC (allocative Efficient) TWO PART TARIFF-solution to dilemma (refer to diagram) Pr
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