PUBLI FINANCE(3.pptVIP

* * * * Box and dimensions initially set 1st click – contract curve drawn from lower left to upper right and “The contract curve” and arrow appear * Axes and labels 1st click – Utility possibilities curve, p3 and p5 2nd click - q * Axes and labels 1st click – the arrow (speed: medium) and “Increasing social welfare” 3. Tools of Normative Analysis 3.1 Welfare Economics 3.1.1 Pure Exchange Economy 3.1.2 An Economy with Production 3.2 The First Fundamental Theorem of Welfare Economics 3.3 The Fairness and the Second Fundamental Theorem of Welfare Economics 3.4 Market Failure 3.5 Buying into Welfare Economics 扣蚀酚斯箕拼筷禽萌涉催北浆琐柳倦寂蒲卧慨房舷锐想倡摩噬冷俏应验新PUBLIC FINANCE(3)PUBLIC FINANCE(3) Welfare Economics: The branch of economic theory concerned with the social desirability of alternative economic state. 设轧龚御毙烹诱仆锦欣兰刁钻蘸士忌纳茵朱啤缸卑盂癣郧往瘴至桑扒第讳PUBLIC FINANCE(3)PUBLIC FINANCE(3) 3.1.1 Pure Exchange Economy Edgeworth Box Pareto efficient allocation: No person can be better off without making another person worse off. Pareto improvement: a reallocation of resources that makes one person better off without making anyone else worse off. Contract curve: the locus of all the Pareto efficient points. Pareto efficiency requires that the marginal rate of substitution be equal for all consumers 脯惶啼囊巾搭蝴桌昨竟锹茫滦给席亿季骤侥即哟拳粳侧鞭赖骸叼筛撞淖筒PUBLIC FINANCE(3)PUBLIC FINANCE(3) Edgeworth Box: A device used to depict the distribution of goods in a two good-two person world. 招披岸佰券灸瘟柿劣原洼郊帆穿楷司氯夫谦孰呻全社臣擒吸授两抖萧带刮PUBLIC FINANCE(3)PUBLIC FINANCE(3) Indifference curves in an Edgeworth Box 娄岳峨慰耀鸣狈噬邦苗惧沈罪堂疥算骗首诣奠由凑聪忽锹一镣村坤净才专PUBLIC FINANCE(3)PUBLIC FINANCE(3) Making Adam better off without Eve becoming worse off 狸旷千乒蒜银醛臀褥宵郧哗镑俄礼托粒盗茨夹腺清瘸纯惑屎牵盯眉舆早绎PUBLIC FINANCE(3)PUBLIC FINANCE(3) Making Eve better off without Adam becoming worse off 置秘制痉没肪性妙酗囊匪郧椰杨棉扦顽胃艘觉纳峡佯幅效咬估恃漏田庞惋PUBLIC FINANCE(3)PUBLIC FINANCE(3) Making both Adam and Eve better off 睡僻隙祷萝扮首洽睁吧弦星撤馅杏近他舌滑底兆荣减殷拟暂啪悲景终裂瞒PUBLIC FINANCE(3)PUBLIC FINANCE(3) Starting f