PAM 200 Chapter 10 - PAM 200 Chapter 10 Partial equilibrium...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
PAM 200 Chapter 10 Partial equilibrium analysis- an analysis that studies the determination of equilibrium price and output in a single market, taking as given the prices in all other markets General equilibrium analysis- an analysis that determines the equilibrium prices and quantities in more than one market simultaneously Externalities- the effect that an action of any decision maker has on the well-being of other consumers or producers, beyond the effects transmitted by changes in prices In equilibrium a competitive market allocates resources efficiently In perfectly competitive market each producer acts in its own self-interest, deciding whether to be in the market and, if so, how much to produce to maximize its own producer surplus Output produced in a perfectly competitive market is the one that maximizes net economic benefits Excise tax- tax on a specific commodity creates a “tax wedge” between price consumers pay for the good and the price that sellers receive market will under produce relative to the efficient level consumer surplus will be lower than with no tax
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

PAM 200 Chapter 10 - PAM 200 Chapter 10 Partial equilibrium...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online