Ec100A Ch9 - 9 GOVERNMENT INTERVENTION IN COMPETITIVE...

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GOVERNMENT INTERVENTION IN COMPETITIVE MARKETS 9 Econ 100A Mortimer
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THE EFFICIENCY OF A COMPETITIVE MARKET Social Welfare: Consumer and Producer Surplus Consumer and producer surplus measure the welfare benefit of a competitive market. In equilibrium, a competitive market allocates resources efficiently. The output produced in a competitive market is the one that maximizes net economic benefits (as measured by the sum of CS and PS). economic efficiency Maximization of aggregate consumer and producer surplus. S D P Q CS Q*=6 P*=8 20 10 PS
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