斯科特微观经济学课件Chapter - General equilibrium and the origins of free-market and intervention.pptVIP

* * * * * Appendix A Chapter 22 General Equilibrium and the Origins of the Free-Market and Interventionist Ideologies * The Free-Market Argument Free-market advocates (laissez-faire) Perfectly competitive markets – efficient No government intervention Interventionists Flaw: Efficient free markets Outcome – not equitable * The Free-Market Argument Economy Given stock of labor capital People = producers consumers Consumers – convex indifference curves Decreasing marginal rate of substitution (MRS goods) Producers – convex isoquants Decreasing marginal rate of technical substitution (MRTS inputs) * The Free-Market Argument Economy’s problems Allocate inputs efficiently – produce goods Quantity each good Efficiently distribute goods Pareto-efficient allocation Allocation of inputs (capital and labor) If reallocated Produce more of one good Produce less of other good * The Free-Market Argument Beliefs Inputs – allocated efficiently Goods – distributed efficiently Supply and demand Mix of goods produced Distribution of income * Efficiency in Consumption Efficient distribution of goods Along contract curve Condition for efficiency in consumption Given set of goods Allocated - set of consumers Until - equal MRS Each pair of goods Each consumer MRS12 for 1 =MRS22 for 1=...=MRSi2 for 1 Figure 22.1 Efficiency in consumption * Each point in the Edgeworth box represents an allocation of goods 1 and 2 between persons 1 and 2. Point a is an inefficient allocation of goods because at that point, MRS1 ≥ MRS2. The contract curve comprises the set of efficient allocations of goods for which MRS1 = MRS2. 0 Good 2 to Person 2 Good 1 to Person 2 0 Good 1 to Person 1 18 Good 2 to Person 1 20 Indifference curve for Person 1 Indifference curve for Person 2 Contract curve b c a 8 12 11 9 12 8 12 6 8 10 6 12 d -4 +1 +1 -3 Efficiency in Production Efficient allocations of inputs Along contract curve Condition for efficiency in production Given set of inputs Allocated - set of pro