Economics: Welfare Theory and Public Goods, Quizzes of Economics

Download Economics: Welfare Theory and Public Goods and more Quizzes Economics in PDF only on Docsity! TERM 1 First Fundamental theorem of Welfare economics DEFINITION 1 -all markers are perfectly competitive -no missing markets - role for govt, to ensure we have a market -property rights - contracts - need govt to enforce laws proof: MRSadam=MRSeve MRSadam=MRSeeve=MRT= (MCapple/MCoj) MRTSapple of L&K =MRTSoj of L&K MP of k/MP of L for apple =MP of k/MP of L for oj TERM 2 Edgeworth box DEFINITION 2 MRS of a&o for adam =MUapple/MUoj MRS of a&o for eve = MUapple/MUoj MRSa&o for adam= MRSa&o for eve=MRPTa&o= MCa/MCo TERM 3 second fundamental theorem welfare economics DEFINITION 3 any efficient allocation through a suitable redistribution of lump sum taxes and transfer TERM 4 Public Goods DEFINITION 4 a good such that everyone utility depends on the total amount of good provided Non-rival- MC of additional user is zero of my consumption of the good Non- excusable- technology impossible to exclude people from the benefits TERM 5 Private good DEFINITION 5 excusable and rival toll roads TERM 6 impure public good DEFINITION 6 non-excusable, rival- like a highway excusable , non rival- like a park with a fence TERM 7 Fixes for a market failure DEFINITION 7 taxes: Pigouvian tax- increase cost of production gets rid of the DWL. Pigouvains tax is parallel to the PMC Regulate: Fines Caps and trade: permits Subsidy Property rights TERM 8 Coase them DEFINITION 8 if property rights are well defined if bargaining cost are low if exclusion is feasible then market will internalize an "externalities" and achieve efficiency TERM 9 Insurance Market DEFINITION 9 .%you will use it(the cost)+.%you will use it(the cost)= how much you should pay TERM 10 Adverse selection DEFINITION 10 Asymmetric info