Lecture 4-1: "" Flashcards Preview

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Flashcards in Lecture 4-1: "" Deck (5)
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1
Q

The “surplus” gained by producers or consumers over their reservation price

A

Social surplus

2
Q

It is feasible and there is no better allocation to make someone better off without being detrimental to another person

A

Pareto efficiency

3
Q

This entity knows everyone’s reservation prices, seller costs. You pick whom produces and consumes.

A

Social Planner

4
Q

The amount at which the (reservation price) = (Seller costs)

A

Efficient Quantity

5
Q

The market is guided by an invisible hand
With this, you make two assumptions:
1. Perfect Competitiveness
2. No externalities

A

First Welfare Theorem