ECON 1110 Chapter Notes - Chapter 4: Economic Surplus, Efficient-Market Hypothesis, Demand Curve

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lavenderseal142

12 Jan 2017

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Taking a good away from a consumer who values it more and giving it to one who values it less: reduces total consumer surplus, reallocate sales among sellers. By purchasing a good you receive ownership rights : makes mutually beneficial transactions in a market possible, prices as economic signals: Economic signal: any piece of information that makes people make better economic decisions. Monday, september 19, 2016: in equilibrium, the quantity demanded = the quantity supplied, so all willing consumers will find sellers, what could go wrong in markets, although a market may be efficient, it may not be fair. Example: a monopoly (when a market contains only one seller of a good) The monopolist can determine the market price: individuals" actions have side effects (externalities) on the welfare of others. Pollution: a problem of incomplete property rights, pollution and other externalities give rise to inefficiency, some goods by nature are unsuited for efficient management by markets.

Related Questions

Efficiency in a market is achieved when

a. social planner intervenes and sets the quantity of output after evaluating buyers willingness to pay and sellers' costs

b. the sum of producer surplus and consumer surplus is maximized

c. all firms are producing the good at the same low cost per unit.

d. no buyer is willing to pay more than the equilibrium price for any unit of the good.

chocolateantelope690

7) Indicate whether each of the following statements is true or false, and explain why.

A. Producer surplus tends to fall as the supply curve becomes more elastic.

B. Consumer surplus tends to rise as demand becomes more elastic.

C. The market demand curve indicates the minimum price buyers are willing to pay at each level of production.

D. The market supply curve indicates the minimum price required by sellers as a group to bring forth production.

E. Consumer surplus is the amount that consumers are willing to pay for a given good or service above and beyond the amount actually paid.

bronzeoyster264

True or False:

1. Consumer surplus is the buyer's willingness-to-pay minus the seller's opportunity cost of production.

2. If your willingness-to-pay for a hamburger is $3 and you paid $2, then your consumer surplus is $5.00

3. The opportunity cost of production for a seller includes the implicit cost of the seller's time.

4. The height of the supply curve at a selected quantity is the seller's opportunity cost of producing that marginal unit.

5. Total surplus (total well-being) is the seller's cost of production minus the buyer's willingness-to-pay.

6. The competitive market equilibrium outcome is efficient because it allocates the produced output to the buyers who place the highest value on the good

7. Producer surplus is the area above the supply curve and below the price.

8. The competitive market equilibrium outcome maximizes total surplus (total well-being)

9. Producing and consuming more of a good will always increase the total surplus(total well-being).

redelephant805

ECON 1110 Chapter Notes - Chapter 4: Economic Surplus, Efficient-Market Hypothesis, Demand Curve

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