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ECON 1000 Lecture Notes - Lecture 8: Robert Nozick, Overproduction, Opportunity Cost

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2 Nov 2011

School

York University

Department

Course

Professor

George Georgopoulos

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ECON 1000 Full Course Notes

ECON 1000 Full Course Notes

Document Summary

Inefficiency can occur because too little of an item is produced, or too much of an item is produced. Deadweight loss - the decrease in total surplus, coming from the inefficient allocation of resources. Social loss - the marginal benefit to society is less than the marginal cost to society. In competitive markets, underproduction and overproduction arise when there are. Price regulations sometimes put a block of the price adjustments and lead to underproduction. Quantity regulations that limit the amount that a firm is allowed to product and lead to underproduction. Taxes increase the prices paid by buyers and lower the prices received by sellers. Subsidies lower the prices paid by buyers and increase the prices received by sellers, which leads to overproduction because the price doesn"t accurately reflect the cost of producing the good. An externality is a cost of benefit that affects someone other than the seller or buyer of a good.

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Related Questions

Question 1

A deadweight loss occurs ________ in a market.

a. when there is underproduction or overproduction

b. only when there is underproduction

c. only when there is overproduction

d. when there is efficient production

Question 2

The value of the slope of a society's production possibility frontier is called its

a. marginal rate of transformation.

b. diminishing opportunity cost of capitalization.

c. marginal rate of substitution.

d. value of diminishing efficiency.

Question 3

When an economy is producing inside its production possibility frontier

a. it is efficient so long as it is producing what people want.

b. it must overcompensate by producing outside the curve to achieve efficiency.

c. only technological advances will allow it to increase production.

d. production inefficiency occurs.

Question 4

Which of the following is a resource as the term is used by economists?

a. land

b. buildings

c. labor

d. All of these

An efficiency loss (or deadweight loss):

A. Is measured as the combined loss of consumer surplus and producer surplus from over- or underproducing.

B. Results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price

C. Can result from underproduction, but not from overproduction.

D. Can result from overproduction, but not from underproduction.

fuchsiawombat158

An efficiency loss or deadweight loss:

1. is measured as the combined loss of consumer surplus and producer surplus.

2. results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price.

3. can result from underproduction but not from overproduction.

4. can result from overproduction but not from underproduction.