MicroChapter7 - Rikki Norton Microeconomics Chapter 7...

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Unformatted text preview: Rikki Norton Microeconomics Chapter 7 Discussion Questions (1, 2, 3, 5, 6) 1. Two types of market failures are market power and externalities. Market power could cause market outcomes to be inefficient because it keeps the price and quantity away from the equilibrium of supply and demand. Externalities could cause the market outcome to be inefficient because of the standpoint of society as a whole. 2. In a supply and demand diagram the producer and consumer surplus is the area between the supply and demand curves up to the equilibrium quantity. 3. The invisible hand is responsible for taking all the information about buyers and sellers into account and guides everyone in the market to the best outcome as judged by the standard of economic efficiency. 5. Efficiency is the property of a resource allocation of maximizing the total surplus received by 5....
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MicroChapter7 - Rikki Norton Microeconomics Chapter 7...

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