16466 Lecture Notes - Lecture 3: Net Domestic Product, Black Market, Final Good

• School: UTS
• Department: Design, Architecture and Building
• Course: 16466
• Professor: Gerard De Valence

Document Summary

Markets in action (ch4: change in prices and quantities sold in markets primarily occur because of, changes in demand, changes in supply. If one of the non-price determinants of demand changes, then the equilibrium price and quantity will change directly proportionally. If one of the non-price determinants of supply changes, then the equilibrium price and quantity will change inversely proportionally: governments implement price controls to influence market forces. Includes: lack of competition, firms without competitors tend to restrict supply through collusion, which raises prices to maximise their profits. Leads to non-optimal allocation: externality: is a cost or benefit imposed on third parties (i. e. people other than the buyers and sellers of the good). Neigh(cid:271)ou(cid:396)(cid:859)s loud (cid:373)usi(cid:272), (cid:374)oise pollutio(cid:374) (cid:271)y ai(cid:396)(cid:272)(cid:396)aft, so(cid:373)e f(cid:396)o(cid:373) a fa(cid:272)to(cid:396)y: app(cid:396)oa(cid:272)hes to sol(cid:448)i(cid:374)g these (cid:858)failu(cid:396)es(cid:859) include, taxes (e. g. pollution taxes, regulations (to limit pollution, positive, e. g.