L21 - Economics 101:Principles of Microeconomics Professor...

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1 Economics 101:Principles of  Microeconomics Professor Jo Hertel Lecture 22: Review Calculators allowed, no books or notes Room assignments as always
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2 Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition Consumption/production efficiency An economy is efficient in consumption when there’s no way to shift consumption goods between consumers that will make noone worse off (and at least one person better off). Consumption efficiency means that the MRS’s between any two goods must be equal across all consumers! An economy with one input is efficient in production when the entire input stock is used 1 2 , , consumer consumer A B A B MRS MRS = Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition
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3 Efficiency in output levels Efficiency in output levels brings consumers and producers together An economy is efficient in output levels if it is efficient in consumption efficient in production there is no way to change production in a way that makes all consumers weakly better off Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition Definition
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4 Answer: D
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This note was uploaded on 04/01/2008 for the course ECON 101 taught by Professor Hansen during the Fall '07 term at Wisconsin.

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L21 - Economics 101:Principles of Microeconomics Professor...

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