BUS 102 Lecture Notes - Lecture 6: Market Failure, Economic Surplus, Externality
28 Sep 2018
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Document Summary
Where buyers and sellers come together to sell commodities exhcnage money to obtain a good, service or commodiety. Can be a brick and motar location but there are many other possibilities of where a market it located ie online. Buyers and sellers make their deals without any interference except from the forces of demand and supply. The concept stands on an economic system in which prices are determined by unrestricted competition between privately owned business. They allocate the supply of goods to buyers who value them most highly, as measured by their willingness to pay. Free markets allocate demand for goods to the sellers who can produce them at the least cost. Organization can decide how to price their products. Free markets produce the quantity of goods that maximizes the sum of quantity of consumer and producer surplus. Occurs when markets yield an inefficient output of resources. Non-rivalrous i(cid:374) co(cid:374)su(cid:373)ptio(cid:374): each party"s e(cid:374)joy(cid:373)e(cid:374)t of goods does (cid:374)ot di(cid:373)i(cid:374)ish a(cid:374)other"s e(cid:374)joy(cid:373)e(cid:374)t.
