Table of Content 1. Understanding the Market 2. Market Floor & Price Support 3. The Effects of Price Support 4. Calculation of the Effects of Price Support Understanding the Market Price support consists of two things you have a price floor and …
Understanding Market Let's take the market for wheat for example and so I've got a downward-sloping demand curve and an upward-sloping supply curve and we see that before the effect of any kind of price floor we see that the consumer surplus…
Price Ceiling Let's think about the market for a college education in the United States. We'll have our price on the y-axis and let's just say that that's the price of one-year tuition at a college in the US and then we have on our…
Table of Content 1. Consumer surplus 2. Producer Surplus 3. Market Surplus 4. Mathematical Calculation of Consumer Surplus 5. Mathematical Calculation of Producer Surplus Consumer surplus Consumer surplus is when a consumer's willingness to pay …
A market failure is a case when the free market just left to operate on its own is going to produce an allocation of goods and resources that is not Pareto efficient. So if you remember from before a Pareto efficient allocation is one in which we co…
Assuming there's not a market failure such as a monopoly or an externality, we assume that competitive markets are going to produce an efficient outcome. The economy is going to be efficient but what do we mean when we say efficient or efficie…
When we say that an allocation of goods in the economy is efficient, what we really are talking about is Pareto efficiency and that means that we're at a point where no one could be made better off. We can't make any person better off witho…
