MGEA02H3 Chapter Notes - Chapter 5: Deadweight Loss, Economic Equilibrium, Opportunity Cost
20 Oct 2018
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MGEA02H3 Full Course Notes
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Doesn"t always cause shortages i. if pc set above the equilibrium price, no effect c. Inefficiency in (lead to surplus = loss over + above dl) i. Deadweight loss (triangle) = loss in total surplus. Dl occurs whenever an action/policy reduces quantity transacted below the effi. market eqrm quantity. Dl is a loss -- to society - not a gain for anyone ii. Loss of oc to make both better off at no additional cost cannot get resources -- ppl really in-need (willing to pay higher price) occupy resources -- less urgent ppl b) iii. Oc cost - time/$/effort for urgent ppl to search for resources, cus o creates missed oppt. iv. Low quality goods @ low price -- even buyers prefer higher (p + Inefficiency in ineff. low quantity (dl), ineff. allocation, ineff. low quanlity of selling good emergency - illegal black markets e. f. Pc also benefit to some ppl too (successful buyers)
