BU111 Chapter Notes - Chapter 7: Demand Curve, Economic Surplus, Invisible Hand
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BU111 Full Course Notes
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Chapter 7: consumers, producers, and the efficiency of markets: welfare economics: study of how the allocation of resources affects the economic well- being, allocation of resources refers to. How much of each good is produced. A+b: fall in cs due to buyers leaving market as p rises a + b. + c to just a (cs rises when buyers enter as p falls a to. Cost and the supply curve producer surplus: cost is the value of everything a seller must give up (cost of resources to produce the good. In a market economy, the allocation of resources is decentralized, determined by the interactions of many self-interested buyers and sellers. Or would a different allocation of resources make society better off? use total surplus to answer this: equity refers to whether the pie is divided fairly subjective, hard to evaluate. Economic well-being cannot be increased by changing allocation of consumption/production. The government cannot improve on the market outcome laissez faire.
