Lecture+25+December+8

Lecture+25+December+8 - Todays agenda The case for market...

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Unformatted text preview: Todays agenda The case for market allocation revisited: A second look at the Fundamental theorem of welfare economics Remedies for market failures Please see me : Marlon Davis Brian Moore Romit Patel Coming attraction Final Exam College Avenue Gym Annex Wednesday, December 22 4 to 7 pm Not in Scott 123! Student Instructional Rating Surveys On Sakai Log in. Click "All Surveys" on the "My Workspace" page. Q & A session Monday, December 20 8:30 to 11:00 a.m. Hickman 138 DB office hours Tuesday, 9 a.m. to noon Hickman 401 My hours for next week, and those of the TAs before exam, are still being worked out. Updates on Sakai Please see me after class: Marlon Davis Brian Moore Romit Patel Pareto efficiency Pareto efficiency : no feasible reallocation of inputs or outputs would make someone better off without making someone worse off. If the allocation of resources is Pareto efficient, then it is impossible to make everyone better off. Necessary conditions for Pareto efficiency Need to distribute output so no consumer can be made better off without making another worse off Need to be on the PPC Need to be at the right point on the PPC Butter Guns First efficiency requirement: Distribute produced goods optimally Distributive efficiency Distribute output so no consumer can be made better off without making another worse off Need: MRS AB me = MRS AB you First efficiency requirement: Distribute produced goods optimally Distributive efficiency Distribute output so no consumer can be made better off without making another worse off Need: MRS AB me = MRS AB you B A B A Me You First efficiency requirement: Distribute produced goods optimally Distributive efficiency Distribute output so no consumer can be made better off without making another worse off Need: MRS AB me = MRS AB you Pareto improvement: You give me 2 bananas. I give you 1 apple. B A B A Me You 1 1 2 2 Pareto improvement: You give me 2 bananas. I give you 1 apple. First efficiency requirement: Distribute produced goods optimally Distributive efficiency Distribute output so no consumer can be made better off without making another worse off Need: MRS AB me = MRS AB you MRS AB me = p A / p B = MRS AB you Utility maximization First efficiency requirement:...
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This note was uploaded on 10/25/2011 for the course ECONOMICS 01:220:102 taught by Professor Prusa during the Fall '10 term at Rutgers.

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Lecture+25+December+8 - Todays agenda The case for market...

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