Lecture 7 - Market Failure and Government (Student)

Lecture 7 - Market Failure and Government (Student) -...

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Lecture VII Markets and the Role of Government Chapter 5, pages 106-121
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Markets and the Role of Government Economic Efficiency and Purpose of Government Market Failures Lack of Competition Externalities Public Goods Lack of Information
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I. Introduction The Mixed Economy in the U.S. Why Markets are Useful Efficient __________ Allocation ____________ Efficiency - resources allocated to the highest valued production. The Invisible Hand
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Economic Efficiency An economic action is efficient if it produces more ______________________. Rule 1: All actions generating more benefit than cost must be taken, no _______________. Rule 2: No activities are undertaken for which the cost exceeds the benefit.
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Economic Efficiency Graphically P Q S D P E Q E 2 P * Economic Inefficiency Economic Efficiency Q 1 Q 3 Economic Efficiency occurs when a market is in equilibrium. Any non-equilibrium outcome is inefficient.
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“If it’s worth doing, it’s worth doing _____________” As more resources are dedicated, MB ___________ and MC ______________. It all comes back to ___________. Possible to do worthwhile actions _______ an efficient level. Perfection is _____________.
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Protective and Productive Protective Protection of Property Rights and Personal Safety. Enforcing Contracts, Fighting Fraud, etc. If people know the benefit of an action is going to
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This note was uploaded on 10/12/2010 for the course MKT 230 taught by Professor Holbein during the Spring '10 term at Kentucky.

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Lecture 7 - Market Failure and Government (Student) -...

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