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Econ101November26 - pareto efficient or close i When not...

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Econ101 November 26, 2007 - Excel set due Wednesday morning at 9:00 - Final Exam is Thursday, December 13 th at 7:00 p.m. in Barton Hall o Review Session: Sunday, December 9 th 8:30-10:00 p.m. in Plant Science 233 o Monday December 10 th 3:00-4:30 Plant Science 233 I. Pure Private Goods a. Two Implicit assumptions about pure private goods i. There is rivalry in consumption 1. If you use it, someone else can’t 2. Food ii. There is feasible excludability 1. There can be a designated set of owners, users 2. Owner of the good can decide who to use it b. Sometimes, these properties are missing c. Pure Public good has neither of these d. See handout for examples e. For pure private goods, under ideal conditions competitive markets are
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Unformatted text preview: pareto efficient, or close i. When not pareto efficient, the market “fails” ii. However, these failures might not cause a lot of inefficiency therefore they don’t really matter f. MC (society) = MC (Private) = Price = MB (private) = MC (society) II. Purely Public Goods a. Markets often fail i. Individuals do not have an incentive to tell the truth because they know they will get what they want anyway ii. To protect intellectual property rights, owners of collective consumption goods are granted limited monopolies iii....
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