16. TAX: EQUILIBRIUM 0 800 900 e Quantity (Thousand tickets a year) Price ($ per ticket) supply demand $10 b h 804 794 920
17. TAX: SURPLUSES 0 800 900 e Quantity (Thousand tickets a year) Price ($ per ticket) supply demand $10 b h 804 794 920 f d j buyer surplus loss = fdge + egb seller surplus loss = djhg + ghb revenue gain = fdge + djhg g
2 Intellectual foundation for capitalist system: markets work better than central planning; to some extent, similar principle applies within an organization -- internal markets; study limitations of internal markets later in Chapter 12 (Asymmetric Information) and 13 (Incentives and Organization) This Chapter concludes presentation of Competitive Markets.
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9 Competitive market achieves three sufficient condition for economic efficiency: buyers and sellers in a market system act independently and selfishly, yet the overall outcome is efficient i) users buy until marginal benefit equals price; ii) producers supply until marginal cost equals prices; iii) users and producers face same price.
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13 Decentralization achieves conditions for economic efficiency
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19 Apply competitive market model
20 Incidence the same with wholesale price cut and coupons (assuming all consumers use coupons)