microeconomicefficiencyandequity(编辑修改稿)

microeconomicefficiencyandequity(编辑修改稿)内容摘要：

eract in markets. Market transactions generate an efficient—highest valued—use of resources. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Market Failure Markets don’t always achieve an efficient oute. Market failure arises when a market delivers in inefficient oute. Market failure can occur because Too little of an item is produced (underproduction) or Too much of an item is produced (overproduction). Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Underproduction If production is restricted to 5,000 pizzas a day, there is underproduction and the quantity is inefficient. A deadweight loss equals the decrease in total surplus—the gray triangle. This loss is a social loss. The efficient quantity is 10,000 pizzas a day. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Overproduction If production is expanded to 15,000 pizzas a day, a deadweight loss arises from overproduction. Again, the efficient quantity is 10,000 pizzas a day. This loss is a social loss. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Sources of Market Failure In petitive markets, underproduction or overproduction arise when there are  Price and quantity regulations  Taxes and subsidies  Externalities  Public goods and mon resources  Monopoly  High transactions costs Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley 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. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley 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 to overproduction. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Externalities An externality is a cost or benefit that affects someone other than the seller or the buyer of a good. An electric utility creates an external cost by burning coal that creates acid rain. The utility doesn’t consider this cost when it chooses the quantity of power to produce. Overproduction results. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley An apartment owner would provide an external benefit if she installed an smoke detector. But she doesn’t consider her neighbor’s marginal benefit and decides not to install the smoke detector. The result is underproduction. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Public Goods and Common Resources A public good benefits everyone and no one can be excluded from its benefits. It is in everyone’s selfinterest to avoid paying for a public good (called the freerider problem), which leads to underproduction. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley A mon resource is owned by no one but can be used by everyone. It is in everyone’s self interest to ignore the costs of their own use of a mon resource that fall on others (called tragedy of the mons). The tragedy of the mons leads to overproduction. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Monopoly A monopoly is a firm that has sole provider of a good or service. The selfinterest of a monopoly is to maximize its profit. To do so, a monopoly sets a price to achieve its selfinterested goal. As a result, a monopoly produces too little and underproduction results. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley High Transactions Costs Transactions costs are the opportunity cost of making trades in a market. To use the market price as the allocator of scarce resources, it must be worth bearing the opportunity cost of establishing a market. Some markets are just too costly to operate. When transactions costs are high, the market might underproduce. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Alternatives to the Market When a market is inefficient, can one of the nonmarket methods of allocation do a better job? Often, majority rule might be used. But majority rule has its own shortings. A group that pursues the selfinterest of its members can bee the majority. Also, with majority rule, votes must be translated into actions by bureaucrats who have their own agendas. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley There is no one efficient mechanism for allocating resources efficiently. But supplemented majority rule, bypassed inside firms by mand systems, and occasionally using firste, firstserved, markets do an amazingly good job. Is the Competitive Market Efficient? 169。 2020 Pearson AddisonWesley Is the Competitive Market Fair? Ideas about fairness can be divided into two groups:  It’s not fair if the result isn’t fair.  It’s not fair if the rules aren’t fair. 169。 2020 Pearson AddisonWesley It’s Not Fair if the Result Isn’t Fair The idea that only equality brings efficiency is called utilitarianism. Utilitarianism is the principle that states that we should strive to achieve ―the greatest happiness for the greatest number.‖ Is the Competitive Market Fair? 169。 2020 Pearson AddisonWesley If everyone gets the same marginal utility from a given amount of ine, and if the marginal benefit of ine decreases as ine increases, then taking a dollar from a richer person and giving it to a poorer person increases the total benefit. Only when ine is equally distrib。