ECON1001 Study Guide - Lead, Strategic Dominance, Cost
31 Jul 2015
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Additional utility gained from consuming one more unit. Sole proprietorship: firm with single owner and unlimited liability. Partnership: two or more owners and unlimited liability. Corporation: one or more owners with limited liability. Not possible to make someone well off without making someone worse off. Requires that: mb=mc for last unit produced, mc of good must be equal for every producer, mb of consuming good is same for everyone. Not binding if set below equilibrium price, therefore doesn"t impact welfare. If binding, it leads to excess supply (surplus), E. g. minimum wage, leading to unemployment, black market, switching occupations. Not binding if set above equilibrium price, If binding, it leads to excess demand (shortage) E. g. rents and housing price controls: leads to queues, discrimination by sellers, black markets. Buyers pay more than sellers receive and keep. Buyers pay less than sellers receive and keep. Therefore, burden of tax falls on more inelastic side of market.
