Class02_1 - 01/30/2008 Class Notes (cover part of Chapter 5...

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01/30/2008 Class Notes (cover part of Chapter 5 in the textbook) Class Outline Is the competitive market Fair? Practice Questions on Chapter 5 Is the competitive market Fair? Economists agree that a competitive market is efficient, but they often disagree whether this efficient allocation is fair. We are going to discuss some ideas that economists have developed to answer this question. However, the idea of fairness encompasses much more than economics. How you conceptualize fairness is based on your personal political, ethical, and religious views. Q: Is it fair that people earn different incomes? Possible A: Utilitarianism We should strive to achieve the “greatest happiness for the greatest number.” To do so, income must be transferred from the rich to the poor until complete equality of income is achieved. How would you call this system? Everyone has the same basic wants and a similar capacity to enjoy life. The greater a person’s income, the smaller is the marginal benefit of a dollar.
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This note was uploaded on 04/29/2008 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

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Class02_1 - 01/30/2008 Class Notes (cover part of Chapter 5...

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