ECO102H1 Study Guide - Final Guide: Output Gap, Open Market Operation, Gdp Deflator

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ECO102H1 Full Course Notes
ECO102H1 Full Course Notes
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When, for each good produced, the marginal cost of production is equal to the price. The cost to the producer of the last good sold, equals the price paid by the consumer. No deadweight loss; total surplus is maximized. To internalize the externalities impose taxes (to increase cost) or subsidies (to decrease cost) The efficient provision of a public good: mb for society = mc smb = mc. Want to compare the smb and the mc (not the total benefit and the total cost) A good should always be provided if society values it more than it costs. Value of output that is produced domestically. Value added approach: value added at each stage of the production process. How much would today"s production have cost us yesterday? . V alue of basket in current prices 1 value of basket in base year. How much would yesterday"s consumption, cost us today? .

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