lecture 9 Flashcards
1
Q
A competitive market creates an efficient allocation of resources at…
A
equilibrium
2
Q
When production is less than equilibrium than…
A
Marginal benefit> Marginal cost
3
Q
When production is greater than equilibrium quantity then…
A
Marginal cost> Marginal benefit
4
Q
when production is equal to the equilibrium quantity
A
marginal cost= marginal benefit
5
Q
When does market failure occur and why?
A
- arises when a market delivers an inefficient outcome
Due to;
-Too little of an item is produced
-too much of an item is produced
6
Q
sources of market failure
A
- price and quantity regulations
-taxes and subsidies
7
Q
describe utilitarianism
A
- the idea that only equality brings efficiency
“ the greatest happiness for the greatest number”
8
Q
what is the big tradeoff for utilitarianism
A
- ignores the cost of making income transfers
-tradeoff between efficiency and fairness
9
Q
A
