ECON 1000 Lecture Notes - Lecture 11: Pareto Efficiency, Market Power

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Econ 1000 week 6 lecture 11. Total surplus = consumer surplus + producer surplus. The marginal costs to produce before the equilibrium price will generally always be the lowest. After the equilibrium point, producers generally stop producing because the marginal cost has gotten too large to really make it worth it to produce more. Basically the opportunity cost has grown too large. Of buyers and sellers: but they ignore third parties either if they"re positive or negative outcomes. Pareto improvement: makes (at least) one person better off, and nobody worse off. Not-pareto optimal: possible to reallocate and make a pareto improvement. Pareto optimal: not possible to reallocate resources to create a pareto improvement. Competitive markets are a good thing because they lead to pareto optimal circumstances. But distribution of resources and monies can also change things. But for now, competitive markets generally lead to pareto optimal scenarios.

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