ECON 101 2Midtermreview

Private property may be transferred from one person

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Unformatted text preview: s to Efficiency In competitive markets, underproduction or overproduction arise when there are Price and quantity regulations Taxes and subsidies Externalities Public goods and common resources Monopoly High transactions costs Price and Quantity Regulations Price regulations sometimes put a block of the price adjustments and lead to underproduction. Quantity regulations that limit the amount that a farm is permitted to produce also leads to underproduction. Taxes and Subsidies Taxes increase the prices paid by buyers and lower the prices received by sellers. So taxes decrease the quantity produced and lead to underproduction. Subsidies lower the prices paid by buyers and increase the prices received by sellers. So subsidies increase the quantity produced and lead...
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