Upload
travis-klein
View
173
Download
0
Embed Size (px)
Citation preview
Using economic vocabulary, describe the cost structures of these two different
firms:
A. Prices to consumers?B. Positive for society?
C. Negatives?D. Food stamp effect?
Types of economic efficiency
Efficiency vocabulary
• Allocative efficiency
• MB > MC what should we do?• MB < MC what should we do?
• MB = MC best situation, using our allocations “best”
• Perfect Competition
Efficiency vocabulary
• Allocative efficiency• Monopoly• Monopolistic Comp• NO
Efficiency vocabulary
• Productive efficiency
• Lowest cost production• Min of ATC
Efficiency vocabulary
• Dynamic efficiency
• SUPER Normal Profit
• Reinvest into lower costs
• Productive Eff.• Productive Eff.• Dynamic Eff.
X
Y
Z
C
• Productive Eff.• Productive Eff.• Dynamic Eff.
BCD
Which prices would result in:Productive Eff.Productive Eff.Dynamic Eff.
PAGES 410-411• 3 quick debates
• How should we define this issue? • Efficiency? Production? Cost?
• Is monopoly efficient?
• Is monopoly fair?
• Is rent seeking justified?