Chapter 3: Inefficiency Adam Brain. Inefficiency l Occurs in situations where optimum price and quantity are not met. l Numerous causes.

Slides:

Advertisements

Similar presentations

Providing Public Goods

Advertisements

Chapter 5 EXTERNALITIES

Chapter 5 Efficiency and Equity

TOOLS OF NORMATIVE ANALYSIS

Chapter 3: American Free Enterprise Section 3

CHAPTER 5 Efficiency.

24 Slides to More Powerful Command of Microeconomics.

Lecture 13-14: Welfare and Social Choice

© The McGraw-Hill Companies, 2008 Chapter 16 Government spending and revenue David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 9th Edition,

Ch. 5: EFFICIENCY AND EQUITY

30 Slides to More Powerful Command of Microeconomics.

Ch. 5: EFFICIENCY AND EQUITY

ENVR 210 CLICKER QUESTIONS Chapter 10 (Mankiw) – Clicker Question Set #2.

Ch. 5: EFFICIENCY AND EQUITY

21 Taxes, Social Insurance, and Income Distribution  Addressing externalities  Providing public goods, maintaining common resources  Taxes, poverty,

HEALTH CARE MARKET Dr. Nabilla Abdul Mohsein Al-Sadat.

C h a p t e r f o u r © 2007 Prentice Hall Business Publishing; Essentials of Economics, R. Glenn Hubbard, Anthony Patrick O’Brien Prepared by: Fernando.

4 THE ECONOMICS OF THE PUBLIC SECTOR. Copyright © 2006 Thomson Learning 10 Externalities.

Are Monopolies Desirable?

CHAPTER 9 Perfect Competition and the Supply Curve PowerPoint® Slides by Can Erbil © 2004 Worth Publishers, all rights reserved.

Persaingan Monopolistik versus Persaingan Sempurna.

Monopolistic Competition 1.Many firms (small market share each). 2.Acting independently (no collusion). 3.Products are differentiated. a. Actual differences.

Government Failure Inefficiency in the Public Sector -Denny Boling.

Balance between markets and intervention. Learning outcomes – Discuss the positivenegative outcomes of market- orientated policies, including a more allocation.

a market structure in which there is only one seller of a good or service that has no close substitutes and entry to the market is completely blocked.

CHAPTER 6 The Economic Role of the State PUBLIC SECTOR ECONOMICS: The Role of Government in the American Economy Randall Holcombe.

1 Economic Approaches to Regulation and its Indirect Effects A brief overview Meeting of Productivity & Regulation Group AIM London, Tuesday 4 April 2006,

Chapter 6: The Role of Profit. Chapter Focus The profit-maximizing rule How businesses in each market structure maximize profits The effects of profit-maximizing.

Evaluating Economic Performance and Capitalism Chapter 2.

Lecture 9 Markets without market power: Perfect competition.

Ch. 12 : Firms in Perfectly Competitive Markets ECONOMICS

 An economy is a system that tries to resolve the basic economic problem and decide what to produce, how to produce, and for whom to produce.  This.

© The McGraw-Hill Companies, 2008 Chapter 16 Government spending and revenue David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 9th Edition,

Market Failure. Occurs when free market forces, using the price mechanism, fail to produce the products that people want, in the quantities they desire.

Market Failures When adequate competition does not exist. In an age where mergers are all too common, the result has been an increase in larger and fewer.

Chapter 17 Taxes and government spending David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation.

MARKET FAILURE Negative / Positive Externalities Social Benefit and Cost.

Market Structure is Important for Two Reasons It influences firm Behavior & Profitability It Influences Economic Performance Which Markets Perform Well.

Monopoly & Efficiency Deadweight Loss Analysis. Allocative Efficiency Total Welfare is maximized only when MC = MB for society –Since MB = Price => only.

Copyright McGraw-Hill/Irwin, 2002 Four Market Models Demand as seen by a Purely Competitive Seller Short-Run Profit Maximization Marginal Revenue.

MARKET FAILURE UNIT -V. MARKET FAILURE :- Market failure occurs when private transactions result in a socially inefficient allocation of goods, services.

Copyright 2008 The McGraw-Hill Companies 21-1 Four Market Models Pure Competition Profit Maximization in the Short-Run Marginal Cost and Short-Run Supply.

MANAGERIAL ECONOMICS 12 th Edition By Mark Hirschey.

Lectures in By Prof. Dr. Younis El Batrik. THE FIELD OF PUBLIC FINANCE Fundamental Economic Facts  The Scarcity of Resources  The necessity of economizing.

October 4&5,  The setting of prices (usually by the government) so that prices can not adjust to the equilibrium level that was determined by demand.

Economic Activity Chapter 19, Section 2. I. Circular Flow of Economic Activity  Market – any economic situation in which there is a willing exchange.

KRUGMAN'S MICROECONOMICS for AP* Introduction to Monopolistic Competition Margaret Ray and David Anderson Micro: Econ: Module.

An Economic Perspective

Chapter 3: American Free Enterprise Section 3

AP MICROECONOMICS UNIT #6 MARKET FAILURE/ ROLE OF GOVERNMENT

Chapter 3 – Market Failure

5a – Price Controls and Negative Externalities

Chapter 4 Markets in Action

Environmental and Natural Resource Economics 3rd ed. Jonathan M

Chapter 3: American Free Enterprise Section 3

PUBLIC GOODS AND EXTERNALITIES

Chapter 4 Markets in Action

Efficiency & Fairness Chapter 6.

CHAPTER 3 MARKET EQUILIBRIUM. CHAPTER 3 MARKET EQUILIBRIUM.

Ch. 5: EFFICIENCY AND EQUITY

Ch. 5: EFFICIENCY AND EQUITY

Welfare Economics Part II

Chapter 3: American Free Enterprise Section 3

Extensions of Demand and Supply Analysis

© 2013 Pearson.

Chapter 3: American Free Enterprise Section 3

16 Monopoly CLICKER QUESTIONS Notes and teaching tips: 3, 4, 5, 6, 7, 13, 16, 17, 19, 20,

CHAPTER 3 MARKET EQUILIBRIUM. CHAPTER 3 MARKET EQUILIBRIUM.

Analysis of Perfectly Competitive Market.

Deadweight Loss Analysis

Presentation transcript:

Chapter 3: Inefficiency Adam Brain

Inefficiency l Occurs in situations where optimum price and quantity are not met. l Numerous causes.

Timeframes l Shortrun: Static Efficiency l Longrun: Dynamic Efficiency

Rules for Allocation l Costs of goods and services versus benifits...measured by oppertunity costs.

Inefficiency in the private sector l Called market failure. Most popular example is Monopoly.

Nonexistant Markets l Unrealized external benifits. l Public Goods. l External costs.

Inocmplete markets l A market without free entry for consumers. l Best decribed by insurance exemptions.

Inefficiency in the public sector l Rent controls. l Agricultural Price Supports. l Government-subsidized Medical Care. l Minimum Wage. l Tax collection.

Tradeoffs of efficiency l Some taxes, like the cigarette tax, are cutting external costs. l Some efficiency losses are considered necessary evil, in order to maintain equity.