Economic Efficiency = Maximization of AGGREGATE CS and PS
Market Failure= Situation when an unregulated competitive market is inefficient because prices fail to provide proper signals to consumers and producers
1. Externality= Action taken by either producer/consumer which affects orther p/c but is not accounted for by the market price (eg: Cost to society of environmental pollution of a chemical plant)
2. Lack of info= Consumers lack infor about the quality or nature of a product and so can't make utility-maximizing purchasing decisions
Perfectly Competitive Markets
Short Run (keywords: price taker, max-prof)
P=MR=AR
Long Run (keywords: max prof, normal prof/breakeven/zero-econ prof)
P=LMC=LAC=LMR=LAR
No comments:
Post a Comment