How does the approach to economic efficiency taken in Chapter 9 relate to the one taken here? How is the possible inefficiency in Figure related to that in Figure ? 11eb5bc8_eb7a_7501_bcf8_0904c7363ae0_SM2615_00 At the competitive equilibrium (Q*), the sum of consumer surplus (shaded dark) and producer surplus (shaded light) is maximized. For an output level less than Q*, say Q1, there is a deadweight loss of consumer and producer surplus given by area FEG. 11eb5bc8_eb7a_7502_bcf8_75d669e698e6_SM2615_00 In this economy, the production possibility frontier represents those combinations of X and Y that can be produced. Every point on the frontier is efficient in a technical sense. However, only the output combination at point E is a true utility maximum for the typical person. Only this point represents an economically efficient allocation of resources.

Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

النسخة 12الرقم المعياري الدولي: 978-1133189022

Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

النسخة 12الرقم المعياري الدولي: 978-1133189022

تمرين 3

How does the approach to economic efficiency taken in Chapter 9 relate to the one taken here? How is the possible inefficiency in Figure related to that in Figure ?

At the competitive equilibrium (Q*), the sum of consumer surplus (shaded dark) and producer surplus (shaded light) is maximized. For an output level less than Q*, say Q1, there is a deadweight loss of consumer and producer surplus given by area FEG.

In this economy, the production possibility frontier represents those combinations of X and Y that can be produced. Every point on the frontier is efficient in a technical sense. However, only the output combination at point E is a true utility maximum for the typical person. Only this point represents an economically efficient allocation of resources.

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Welfare is related to wellbeing of peopl...