Feburary-1

Feburary-1 - Rationing problem Black markets Example: Rent...

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ECON 203 Notes 23:18 Efficient Allocation Productive efficiency  Producing goods in the least costly way  Using the best technology  Using the right mix of resources  Allocative Efficiency Producing the right mix of goods  The combination of goods most highly valued by society Complex Cases  Change in Supply: 1. Increase 2. Decrease 3.   Change in Demand: decrease 2. Increase  Effect on Equilibrium price: 1. Decrease 2.   Effect on Equilibrium: 1. Indeterminate 2.   Government Set Prices Price Ceiling Set below equilibrium price
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Unformatted text preview: Rationing problem Black markets Example: Rent control Government Set Prices Price Floors Price are set about the market price Chronic surpluses Minimum wage laws Legal Market for Human Organ What if we created a legal market for human organs> Positive effects Increase the incentive to donate Eliminate the persistent shortage of eyes, livers, hearts, kidneys, etc. Negative effects Increase the cost of medical care Diminished the special nature of life by commercializing it. 23:18 23:18...
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Feburary-1 - Rationing problem Black markets Example: Rent...

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