Introduction Principles of Microeconomics 2013 Boris Nikolaev
Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.
-
Upload
bret-edsell -
Category
Documents
-
view
229 -
download
0
Transcript of Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.
![Page 1: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/1.jpg)
Economic EfficiencyPrinciples of Microeconomics 2023
Boris Nikolaev
![Page 2: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/2.jpg)
The Water-Diamond Paradox
![Page 3: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/3.jpg)
![Page 4: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/4.jpg)
Another look at the demand curve…
P
Q
D = MB
We can think of the demand curve asThe marginal (additional) benefit fromconsuming one more unit of good.
![Page 5: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/5.jpg)
Consumer Surplus
P
Q
D = MB
Difference between what consumersare willing to pay and what they actually pay.
![Page 6: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/6.jpg)
"The price which a person pays for a thing can never exceed, and seldom comes up to that which he would be willing to pay rather than go without it: so that the satisfaction which he gets from its purchase generally exceeds that which he gives up in paying away its price; and he thus derives from the purchase a surplus of satisfaction. The excess of price which he would be willing to pay rather than go without the thing, over that which he actually does pay, is the economic measure of this surplus satisfaction. It may be called consumer’s surplus.“
A. Marshall
![Page 7: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/7.jpg)
Producers Surplus
P
Q
S=MC
Difference between what producersare willing to sell their product at and what they actually receive for it.
![Page 8: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/8.jpg)
Efficiency gains from trade
• In Just Go With It [watch here]
![Page 9: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/9.jpg)
Efficiency (in a free market)
P*
Q*
S
D
![Page 10: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/10.jpg)
Welfare (deadweight) loss (underproduction)
P*
Q*
S=MC
D=MB
![Page 11: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/11.jpg)
Welfare (deadweight) loss (overproduction)
P*
Q*
S
D
![Page 12: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/12.jpg)
Do you support welfare programs?
![Page 13: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/13.jpg)
The American Class System
“Who controls the past, controls the future. And those who control the present control the past.”
George Orwell
![Page 14: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/14.jpg)
Government Price-Fixing
• Price floors (e.g. the minimum wage law)• Price ceilings (e.g. rent control)• Price support (dairy subsidies)
![Page 15: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/15.jpg)
Price Floor (e.g. minimum wage)
P*
Q*
P
S labor
D labor
min. wage
![Page 16: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/16.jpg)
Price Floor (e.g. minimum wage)
P*
Q*
P
S labor
D labor
min. wage
![Page 17: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/17.jpg)
Economic Effects of a min. wage
![Page 18: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/18.jpg)
Price Ceiling (e.g. rent control)
P*
Q*
P
S
D
rent ceiling
![Page 19: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/19.jpg)
Price Ceiling (e.g. rent control)
P*
Q*
P
S
D
rent ceiling
![Page 20: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/20.jpg)
Economic effects of rent control
![Page 21: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/21.jpg)
Price Support (dairy price support)
P*
Q*
S
D
P support price
![Page 22: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/22.jpg)
Price Support (dairy price support)
P*
Q*
S
D
P
support price
![Page 23: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/23.jpg)
Economic Effects of price support
![Page 24: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/24.jpg)
Should we legalize the market …
… for human organs?
![Page 25: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/25.jpg)
Currently…
P*
Qs*
S
D
P
Notice that the supply curveis vertical. We will call suchcurve perfectly inelastic.
Qd0
cost is $0 (donations) shortage of organs (89K waiting list + 400 die every year)
<
![Page 26: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/26.jpg)
What if we had a free market?
P*
Q*
S
D
![Page 27: Economic Efficiency Principles of Microeconomics 2023 Boris Nikolaev.](https://reader036.fdocuments.in/reader036/viewer/2022062417/5518ada0550346b31f8b4d86/html5/thumbnails/27.jpg)
What about prostitution?