ch07消费者奖生产者与市场效率.pptVIP

* Is the market’s allocation of resources desirable? This question is important, because the answer to it has implications for the proper role and scope of government. If the market’s allocation is generally desirable, then the role of government should be limited to the protection of property rights, national defense and so forth. If not, then public policy may potentially be able to improve upon the market’s allocation. * It may be worth reminding your students that, at each Q, the height of the D curve is the marginal buyer’s valuation of the good. Hence, the buyers from 0 to 15 all value the good at least as much as the price, so they will purchase the good at the market price. The buyers from 15 on up value the good less than $30, so they won’t buy the good. * Because the height of the S curve tells us seller’s costs, we can determine the following: The sellers of the first 15 units have cost $30, so it is worthwhile for them to produce the good. The other sellers have cost $30, so they will not sell the good if P = $30. * This slide shows that, if we are starting from a Q less than the market equilibrium quantity, we can increase total surplus by increasing Q. The slide demonstrates this for one particular Q (10), but it is true for any Q below the equilibrium quantity. Thus, if we continue to increase Q, total surplus will continue to increase – until we get to the equilibrium quantity. * This slide shows that, if we are starting from a Q greater than the market equilibrium quantity, we can increase total surplus by reducing Q. The slide demonstrates this for one particular Q (20), but it is true for any Q greater than the equilibrium quantity. Thus, if we continue to reduce Q, total surplus will continue to increase – until we get to the equilibrium quantity. * This slide summarizes the lesson of the preceding two slides. Example of central planner: the Communist leaders of the former Soviet Union. * The italicized terms m