lecture4 - Welcome Economist!!! Lecture 5 Objectives Todays...

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Unformatted text preview: Welcome Economist!!! Lecture 5 Objectives Todays Lecture: Efficiency Consumer Surplus Producer Surplus Deadweight Loss Self-Interest and the Social Interest Purchases - expression of how scarce resources should be used Choices are made in your self-interest . Markets coordinate your choices with those of everyone else. Notions of Efficiency In Engineering: The ratio of the work done or energy developed by a machine, engine, etc to the energy supplied to it- Output per unit of input In Production: Cannot produce more with of one good without producing less of the other.- More inputs to produce more output Notions of Efficiency In Economics: Cannot make any one person better off without making another worse off- Pareto Efficiency- Different than the textbook definition Parkins Definition of Efficiency Efficient Allocation Of Resources Produce the goods and services that people value most highly. Not possible to produce more of a good or service without giving up some other good or service that is valued more highly. Based on value; peoples preferences determine value. How is efficiency determined? Marginal Benefit ( Additional Benefit ) Benefit a person receives from consuming one more unit of a good or service....
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This note was uploaded on 04/10/2008 for the course ECON 001 taught by Professor Herman during the Spring '08 term at Georgetown.

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lecture4 - Welcome Economist!!! Lecture 5 Objectives Todays...

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