Chapter 7, 10, 11 notes

Chapter 7, 10, 11 notes - Notes I. II. Ch. 7 a. Market...

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Notes I. Ch. 7 a. Market failure- when market fails to allocate resources efficiently. i. Monopoly power- uses too few resources to produce goods at an artificially higher price 1. anti-trust policy- attempts to foster a market structure that will lead to increased competition and to curb anticompetitive behavior that harms consumers 2. be sure to review antitrust laws section ii. Spillovers or externalities- a spillover is a cost or benefit imposed on people other than the producers and consumers of a good or service; ex- the “market supply curve does not reflect all of the costs resulting from the production of chemicals” (pg. 200) iii. Public goods iv. Inadequate information v. Economic inequality b. Private goods- produced through the market system i. Divisible-produced in units small enough to be purchased by individual consumers ii. Exclusion principle- only those that have the ability to pay can purchase the good iii. Principle of rival consumption- “when I eat a Big Mac you can’t eat the same one” c. Public goods-not provided by the market system; like national defense, highways, rivers, etc. i. Indivisible ii. Not subject to exclusion principle iii. Not subject to principle of rival consumption II. Ch 10 a. GDP- the market value of all final goods and services produced within a country in a given year i. GDP combines the different types of goods and services into a single measure of economic activity, using the total market value 1. total market value means that we take the quantity of goods
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Chapter 7, 10, 11 notes - Notes I. II. Ch. 7 a. Market...

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