Question
In: Economics
Is the free market equilibrium (i.e. allocatively efficient) the point at which social welfare (i.e. consumer...
Is the free market equilibrium (i.e. allocatively efficient) the point at which social welfare (i.e. consumer surplus + producer surplus - deadweight loss) is maximised? Moreover, do Pigouvian (assuming to tax accurately captures the effect of the externality) taxes necessarily lead to an increase in social welfare?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
The type of market structure most likely to be allocatively efficient is pure monopoly. monopolistic competition....
The type of market structure most likely to be
allocatively efficient is
pure monopoly.
monopolistic competition.
a purely price discriminating auction.
Which of the following changes will not affect the market supply
or the market demand in a purely competitive industry?
a change in the number of firms
a change in the number of buyers
a change in fixed costs
a change in marginal costs
The prices of raw materials increase in a purely competitive
industry. This change will result...
Explain why economists believe that in standard markets the equilibrium is efficient, and welfare is maximised....
Explain why economists believe that in standard markets
the equilibrium is efficient, and welfare is maximised. Use and
describe the fundamental assumptions and laws of
economics.
How do free competitive markets maximize social welfare? In addition, what are market failures and how...
How do free competitive markets maximize social welfare? In
addition, what are market failures and how do they affect social
welfare?
How do free competitive markets maximize social welfare? In addition, what are market failures and how...
How do free competitive markets maximize social welfare? In
addition, what are market failures and how do they affect social
welfare?
How do free competitive markets maximize social welfare? In addition, what are market failures and how...
How do free competitive markets maximize social welfare? In
addition, what are market failures and how do they affect social
welfare?
Consider the utilitarian (Benthamite) social welfare function and the Rawlsian social welfare function. Which one is...
Consider the utilitarian (Benthamite) social welfare function
and the Rawlsian social welfare function.
Which one is more consistent with a government that
redistributes from the rich to the poor? Which is more consistent
with a government that does not do any redistribution from the rich
to the poor?
Reconsider your answer to part (a). Show that either of the two
social welfare functions can still be consistent with government
redistribution from the rich to the poor. (Hint: think about the...
A monopolist is a: Price taker Price maker Efficient firm Firm with high consumer welfare
A monopolist is a:
Price taker
Price maker
Efficient firm
Firm with high consumer welfare
The equilibrium price of a product which is sold in a free, open and competitive market...
The equilibrium price of a product which is sold in a free,
open and competitive market is determined by the market demand and
the market supply of the product. However, sometimes the current
market price of the product is not at its equilibrium level.
- Explain how and why the equilibrium price of the product
will be reached.
- Provide a simple numerical example and draw a graph in order
to support your explanation.
under perfectly competitive (free) markets, welfare is maximized and resource allocation is efficient. However, when there...
under perfectly competitive (free) markets, welfare is maximized
and resource allocation is efficient. However, when there is a
market failure, this result no longer holds. Choose an example of a
market failure and provide a definition. Explain why the market
failure you chose, will result in reduced welfare and/or a
misallocation of resources. Use examples to support your
argument.
Explain why a perfectly competitive market maximizes social welfare.
Explain why a perfectly competitive market maximizes social
welfare.
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