MBMC Copyright c 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6: Perfectly Competitive Supply Slide 1 Reality check: goal of profit maximizing firms in real life Privatize profits and socialize costs Who gets the benefits from risky financial investments that pay off, who pays the costs when they don’t? Costs of mercury contamination, climate change, etc.? Who pays the costs of phosphorous and nitrogen runoff from farms, habitat loss, ozone thinning from methyl bromide, etc.? Welfare for Wal-Mart employees, etc.

MBMC Copyright c 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6: Perfectly Competitive Supply Slide 2 Reality check: goal of profit maximizing firms in real life Maximize subsidies Ag subsidies: $288 billion despite record profits

MBMC Copyright c 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6: Perfectly Competitive Supply Slide 3 Reality check: goal of profit maximizing firms in real life Energy subsidies, perverse subsidies

MBMC Copyright c 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Why do so many corporations donate to Democrats and Republicans at the same time?

MBMC Copyright c 2004 by The McGraw-Hill Companies, Inc. All rights reserved.