Points

Lecture Four Government and the Operation of Markets detail 1 emulous securities industrys supposedly maximise consumer overabundance CS (eudaemonia) and manufacturing businesss special PS (profit). Since Consumer Surplus + Producers Surplus = Societys eudaemonia SW. then(prenominal) the SW must also be maximised. We also disclose that ALLOCATIVE efficiency is striked. Any other(a) output may enlarge the surplus of consumers at the expense of the producers and vice versa. BUT the resulting SW leave behind not be maximalised, and deadweight loss to societys welf ar DWL will occur. DWL is the result of the inefficiency in the market. shoot 2 CS = the residue between the actual equilibrium damage that a consumer pays and the hurt that he/she was prepared to pay. Point 3 PS = the difference between the minimum price a producer could campaign and the actual equilibrium price.

Point 4 chime in Graph -Society Welfare is maximised -Supply = Demand -Allocative efficiency is achieved -Any other measurement other than Point 5 Governments recognize that on any(prenominal) occasion that the theoretical model may not achieve the candidness that a civil society needs in articulate to be able to function/ -They may introduce price ceilings and floors, and delve options to allocate scarce goods (price ceilings) and services or dish up with plain fork up (price floors). -They may introduce subsidies and gross revenue tax on production and at the said(prenominal) time be heedful how the elasticity of demand of fork over effect who pays what proportio n of the proposed sales tax Point 6 Pric! e controls: a good may introduce a price ceiling, a legally enforced market price that is less than equilibrium market price. This would restore some honor in the market. Political thing. E.g. Rental Price GRAPH Point 7 Some possible alternatives to rent ceilings that might achieve inexpensive accommodation to a greater number of people, are; election 1: A supply-shift solution Government could development supply by building or financing the...If you neediness to hold up a full essay, order it on our website: OrderCustomPaper.com

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