Economics 1021A/B Chapter Notes - Chapter 5: Economic Surplus, Demand Curve, Marginal Utility

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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Resource allocation methods evaluate the ability of markets to allocate resources efficiently and fairly: we must compare it with its alternative resources are scare, must be allocated trading in markets i just one of several alternative methods. Market price price get the resource afford to buy doesn"t matter. Contest allocates resources to a winner i. e. sporting events contests do a good job when the efforts of the players are hard to monitor and reward directly. Personal characteristics allocated on the basis of personal characteristics, people with the right characteristics get the resources some of the resources that matter most to you are allocated this way. Supply and marginal cost firms must sell their output for a price that exceeds the cost of production. Overproduction consumers are willing to pay only for a pizza that costs to produce resources are wasted deadweight loss is borne by the entire society: it is a social loss.

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