Principles of Economics- Mankiw (5th) 135

Principles of Economics- Mankiw (5th) 135 - “right...

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IN THIS CHAPTER YOU WILL . . . See that the equilibrium of supply and demand maximizes total surplus in a market Examine the link between sellers’ costs of producing a good and the supply curve Examine the link between buyers’ willingness to pay for a good and the demand curve Learn how to define and measure consumer surplus Learn how to define and measure producer surplus When consumers go to grocery stores to buy their turkeys for Thanksgiving din- ner, they may be disappointed that the price of turkey is as high as it is. At the same time, when farmers bring to market the turkeys they have raised, they wish the price of turkey were even higher. These views are not surprising: Buyers al- ways want to pay less, and sellers always want to get paid more. But is there a
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Unformatted text preview: “right price” for turkey from the standpoint of society as a whole? In previous chapters we saw how, in market economies, the forces of supply and demand determine the prices of goods and services and the quantities sold. So far, however, we have described the way markets allocate scarce resources without directly addressing the question of whether these market allocations are desirable. In other words, our analysis has been positive (what is) rather than normative (what C O N S U M E R S , P R O D U C E R S , A N D T H E E F F I C I E N C Y O F M A R K E T S 141...
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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