Microeconomics Chapter 4 more

Microeconomics Chapter 4 more - Microeconomics Chapter 4...

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Microeconomics Chapter 4 more: 1. Key Points - Once a market is in equilibrium there is no way to increase the gain from trade - Any other outcome will reduce total surplus - The markets four important functions once it is efficient: It allocates consumption of the god to the potential buyers who most value it, as indicated by the fact that they have the highest willingness to pay It allocates sales to the potential sellers who most value the right to sell the good as indicated by the fact that they have the lowest cost It ensures that every consumer who makes a purchase values the good more than every seller who makes a sale so that all transactions are mutually beneficial It ensures that every potential buyer who doesn’t make a purchase values the good less than every potential seller who doesn’t make a sale so that no mutually beneficial transactions are missed. 2. Although a market may be efficient it isn’t necessarily fair. Fairness, or equity, is often in conflict with efficiency.
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This note was uploaded on 10/09/2011 for the course ECO 2023 taught by Professor Underwood-caputo during the Spring '08 term at University of Central Florida.

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