CH 6 - produced without giving up another good or service...

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CH 6 Resource allocations- the ability of markets to direct resources in the social interest that are both efficient and fair 1. Market Price -method to allocate resources, the people most willing to pay receive the resources 2. Command - someone in authority decides how resources are allocated 3. Majority Rule - allocates resources to the people with the most votes 4. Contest- used when efforts of participants are not visible 5. First come, First serve - whoever is in line first gets the resources 6. Sharing Equally- everyone gets the same amount 7. Lottery- Put your name in a hat and allocated goods are random 8. Personal Characteristics- only certain people with certain traits get resources 9. Force - taking it, stealing, taxation Social Interest Allocated Efficiency- production such that more of a good or service cannot be
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Unformatted text preview: produced without giving up another good or service that is more highly valued Fairness-Consumer surplus- area below the demand curve/ marginal benefit of good-price paid for the good/(quantity consumed) As the price rises, the consumer surplus falls/As price falls, the consumer surplus rises-Total amount paid = price * quantity-total benefit = amount paid + surplus Hamburger $10 $7.50 consumer surplus $2.50 Cost-what seller gives up to produce the good-supply curve- minimum price must receive to produce a good-marginal cost curve/minimum price the seller must receive Price- what seller receives to produce the good Producer surplus= pirce of good-cost to produce the good Producer surplus-Net benefit of sellers participating in a market (grey shaded area)...
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CH 6 - produced without giving up another good or service...

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