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Unformatted text preview: o Excess of total benefit over total expenditure o Marginal benefit minus price for all units Seller – individual behavior • Marginal cost- additional cost of producing another unit o Larger as more is sold • Optimal selling P = MC • P greater than mc sellmore • P less than MC don’t sell Market supply • Supply reflects marginal costs o Examine individual sellers’ supply o Quantity supplied is sum of individual supplies Good fortune from participating in the market • Excess of total revenue over variable cost • Price minus marginal cost for all units Pareto efficient – cannot make someone better off without making someone else worse off at the same time Allocative efficiency – MB = MC Production matches tastes Distributive fficency – MB = fr all buyers No improvement with redistribution Productive efficiency MB- for all sellers Cannot produce at lower cost...
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- Fall '08
- Economics, MC Marginal Cost, mc sellmore, mb marginal benefit