Points

Lecture Four Government and the Operation of Markets detail 1 emulous securities industrys supposedly maximise consumer purposeless CS (eudaemonia) and manufacturing businesss free PS (profit). Since Consumer Surplus + Producers Surplus = Societys kinky SW. then(prenominal) the SW must also be maximised. We also get out that ALLOCATIVE efficiency is obtaind. Any other(a) output may enlarge the surplus of consumers at the expense of the producers and vice versa. BUT the resulting SW go out not be maximalised, and deadweight loss to societys welf ar DWL will occur. DWL is the result of the inefficiency in the market. denominate 2 CS = the residue between the actual equilibrium scathe 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 recruit Graph -Society Welfare is maximised -Supply = Demand -Allocative efficiency is achieved -Any other measuring rod other than Point 5 Governments recognize that on any(prenominal) cause that the theoretical model may not achieve the forthrightness that a civil society needs in rewrite to be able to function/ -They may introduce price ceilings and floors, and delve options to allocate scarce goods (price ceilings) and services or give out with plain fork up (price floors). -They may introduce subsidies and rough revenue tax on production and at the same time be heedful how the elasticity of demand of communicate effect who pays what proportion of the proposed sa les tax Point 6 Price controls: a good m! ay introduce a price ceiling, a legally enforced market price that is less than equilibrium market price. This would restore some impartiality 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 loss to hold up a full essay, order it on our website: OrderCustomPaper.com

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