ofcompet容itivemarkets(微观经济学-华侨大学,jeff.ppt

;Topics to be Discussed;Topics to be Discussed;Evaluating the Gains and Losses fromGovernment Policies--Consumer and Producer Surplus;Producer Surplus;To determine the welfare effect of a governmental policy we can measure the gain or loss in consumer and producer surplus. Welfare Effects Gains and losses caused by government intervention in the market.;The loss to producers is the sum of rectangle A and triangle C. Triangle B and C together measure the deadweight loss.;Observations: The total loss is equal to area B + C. The total change in surplus = (A - B) + (-A - C) = -B - C The deadweight loss is the inefficiency of the price controls or the loss of the producer surplus exceeds the gain from consumer surplus.;Observation Consumers can experience a net loss in consumer surplus when the demand is sufficiently inelastic;B;Price Controls and Natural Gas Shortages;Supply: QS = 14 + 2PG + 0.25PO Quantity supplied in trillion cubic feet (Tcf) Demand: QD = -5PG + 3.75PO Quantity demanded (Tcf) PG = price of natural gas in $/mcf and PO = price of oil in $/b.;PO = $8/b Equilibrium PG = $2/mcf and Q = 20 Tcf Price ceiling set at $1 This information can be seen graphically:;B;Measuring the Impact of Price Controls 1 Tcf = 1 billion mcf If QD = 18, then P = $2.40 [18 = -5PG + 3.75(8)] A = (18 billion mcf) x ($1/mcf) = $18 billion B = (1/2) x (2 b. mcf) x ($0.40/mcf) = $0.4 billion C = (1/2) x (2 b. mcf) x ($1/mcf) = $1 billion;Measuring the Impact of Price Controls 1975 Change in consumer surplus = A - B = 18 - 0.04 = $17.6 billion Change in producer surplus = -A - C = -18-1 = -$19.0 billion;Measuring the Impact of Price Controls 1975 dollars, deadweight loss = -B - C = -0.4 - 1 = -$1.4 billion In 2000 dollars, the deadweight loss is more than $4 billion per year.;The Efficiency ofa Competitive Market;The Efficiency ofa Competitive Market;Government intervention in these markets can increase efficiency. Government intervention without a market failure creates inef