ECON101 Lecture Notes - Lecture 8: Economic Equilibrium, Marginal Utility, Black Market
15 Oct 2015
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Econ101-004 lecture 8 - efficiency and equity. Resources are scarce: must be allocated efficiently and fairly. Note: most commonly allocation method is the pricing system where price determine allocation of g/s. Highways, atm machines, fast food restaurants: sharing equally, lottery, best when there is no effective way to distinguish among potential users of scarce resource, ex. Resources are allocated efficiently and in the social interest when they are used in ways that people value most highly (marginal benefit = marginal cost) Demand, willingness to pay, and value: marginal benefit: the value of one more unit of a g/s, value: what we get. Measured as the maximum price a person is willing to pay: price: what we pay. Willingness to pay determines demand: demand curve is a marginal benefit curve. At /cookie, lisa demands 30 cookies and nick demands 10 cookies. The market quantity demanded at is 40 cookies. (30+10)
