First Fundamental Theorem of Welfare Economics
Welfare economics- giving well being to a society
- consumer/producer surplus
- focus supply/demand and consumer/choice theory.
- consumer choice theory drives our demand
- utility is not measurable.
- we als
- Obama signs in ACA- affordable care act.
- spends 1 trillion on health insurance, offset my spending reduction on existing
- taxes the wealthy
- Insurance cant discriminate against sick patients.
The Patient Protection a
1.2 Facts on governemnt in the US and around the world
Size and growth
- growth is measured in GDP.
Public Goods- Goods for which the investment of any one individual benefits
everyone in a larger group.
Decentralization (or decentralisa
DO we need government?
- of it goes to the government.
- would the roads be built?
- would there be smoke detectors or sprinklers?
- would there be good air/water without the government?
- If there is no gov, there would be no roads, no water, and no clea
In economics, the demand curve is the graph depicting the relationship between
the price of a certain commodity and the amount of it that consumers are willing
and able to purchase at that given price. It is a graphic representation of a
Total surplus at market quantity = Total Social Surplus - Deadweight loss
in negative externalities
- external damage and cost have a measurable damage cost
- 3rd party will make negative trades for higher private benefit
- trades that cost more than they
Social Insurance Programs.
- governemtn provision of insurance against adverse events to adress failures in the
private insurance market.
Regulatory Role of the Government
- Regulates economic and social activities.
1.3 Policy debates over social security
4 questions of public finance
- public finance- study of role of government in the economy.
- When should the gov intervene?
- How might the gov intervene?
- What is the effect of those interventions?
- Why do governments choose to intervene the way that
Sellers have to take the prices
where marginal cost = price, thats the marginal cost
Simple model of production
technology shifts curves
law of supply and demand
- Market price is = to equilibrium price
First theorem of welfare economics
- markets are eff