ECON 1116 Chapter Notes - Chapter 7: Market Failure, Market Power, Demand Curve
26 Jan 2015
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Ch. 7 consumers, producers, and the efficiency of markets : welfare economics. The study of how the allocation of resources affects economic well-being. The maximum amount that a buyer will pay for a good: consumer surplus. Area below the demand curve and above the price (the market) A good measure of economic well being if policymakers want to respect the preferences of buyers. The value of everything a seller must give up to produce a good: producer surplus. Area below the price and above the supply curve. (the market) Max the economic well being of a society: efficiency. The property of a resource allocation of maximizing the total surplus received by all members of society: equality. Many economists believe that there would be large benefits to allowing a free market in organs. Some believe it will only benefit the rich. In reality, competition sometimes is far from perfect.
