01:220:102 Chapter Notes - Chapter 5: Deadweight Loss, Competitive Equilibrium, Social Cost

• School: Rutgers University
• Department: Economic
• Course: 01:220:102
• Professor: Erin Fairweather

Document Summary

Goal of chapter is to evaluate the ability of markets to allocate resources efficiently and fairly. People who are willing and able to pay the price get the resource. 2 types of people decide not to pay market price. Those who are too poor and simply can"t afford to buy. Command system- allocates resources by the order (command) of someone in authority. Works well in organizations in which the lines of authority and responsibility are clear and it is easy to monitor the activi ties being performed. Works badly when the range of activities to be monitored is large and when it is easy for people to fool those in authority. Allocates resources in the way tat a majority of voter choose i. e. majority rule decides how tax dollars are allocated among competing uses such as education and health care.