BIOL 1011 Lecture : Lecture17 1
Document Summary
Outline: the price system: rationing and allocating resources. Price rationing, constraints on the market and alternative rationing. Mechanism, prices and the allocation of resources, price floors: supply and demand analysis: an oil import fee, supply and demand and market efficiency. Consumer surplus, producer surplus, competitive markets maximize the. Sum of producer and consumer surplus, potential causes of deadweight loss from under-and overproduction: looking ahead. The price system performs two important and closely related functions: it allocates goods and services when there is a shortage (price rationing), it determines the allocation of resources among producers and hence the final mix of outputs. Price rationing- the process by which the market system allocates goods and services to consumers when quantity demanded exceeds quantity supplied i. e. removes shortage. Governments and private firms sometimes decide to ration a particular product using some non-price mechanism. The rationale given for this is usually fairness which includes:
