FHCE 5100 Lecture Notes - Lecture 4: Pareto Efficiency, Distribution Of Wealth, Market Power

• School: University of Georgia
• Department: Financial Planning, Housing and Consumer Economics
• Course: FHCE 5100
• Professor: Moorman

Document Summary

Market: situations where buyers and sellers make voluntary independent decisions that result in equilibrium prices and quantities for goods/services: occurs in absence of coercion. Government: may constrain or limit individual actions to attain group ends: occurs with coercion (forcing, gov. Laws // firm chick-fil-a or hobby lobby closed sunday. The greater the degree of voluntary consumer action the more the market works. More constraints (gov. ) the less the market works. Consumption rival: if i consume than you cannot consumer at the same time. Divisible: can be sold/consumed one unit at a time. Excludable: good can be withheld from a potential customer. Assumption 2: value/utility of a good is reflected in demand function for that good. The value or utility of a good is dependent on the demand or preference for it. Assumption 3: all costs are reflected in the supply function for that good.