ECO105Y1 Study Guide - Midterm Guide: Marginal Utility, Marginal Cost

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12 Mar 2014
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Short answer problems: any 3 of following 5. Outputs produced at lowest cost (price just covers all opportunity costs) Outputs go to those most willing and able to pay: 2 groups of consumers excluded. Consumers who find the product is not worth buying even though they are willing, marginal benefit is less than price. Cannot afford to buy but still find product/service is worth the price, marginal benefit is greater than the price: policy supported by those on the left. Everyone gets a comparable outcome at the end: on the right. Equality of opportunity: price fixing/ceiling reduces efficiency but helps those who are homeless/poor afford housing. Multiple choice: economic profits, business owners a) breaking even, rent ceiling set above e) has no impact, business has no fixed costs b) marginal cost is 0, economic losses are a sign that .