ECO202_Ch09 copy - CHAPTER 9 The Analysis of Competitive...

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9.1Evaluating the Gains andLosses from GovernmentPolicies—Consumer andProducer Surplus9.2The Efficiency ofCompetitive Markets9.3Minimum Prices9.4Price Supports andProduction Quotas9.5Import Quotas and Tariffs9.6The Impact of a Tax orSubsidyC H A P T E R9The Analysis ofCompetitive MarketsCHAPTER OUTLINE
Consumer and Producer Surplus9.1Consumer surplus and producer surplus are used to study the welfare effects ofa government policyWe use consumer surplus and producer surplus to:1.Demonstrate the efficiency of a competitive market2.Calculate the response of markets to changing economicconditions or government policies to evaluate the resulting gains andlosses to consumers and producers
CONSUMER ANDPRODUCER SURPLUS
The Efficiency of a Competitive Market9.2Economic efficiencyMaximization of consumer surplus plus producer surplusMarket failureSituation in which an unregulated competitive market is inefficient, i.e.

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