what's the definition for the “welfare economics” and “well-being”? (both subjective and objective)
welfare is the study of how the allocation of resources affects the economic well-being
well-being is the satisfaction or happiness reported by an individual.
subjective well-being refers to the way in which people evaluate their own happiness, for example, feeling about work.
Objective well-being refers to measures of the quality of life and uses indicators developed by researchers, for example, educational attainment, or life expectancy.
when is efficiency achieved?
efficiency is achieved when it is no longer possible to raise the production of a good without lowering the production of another good. Or when it is no longer possible to raise the welfare of a economic subject, without reducing the welfare of another economic subject.
name all three outcomes that should be achieved in an efficient allocation
The value of the outcome by the seller matches, the value placed on that outcome by the buyer.
both sellers and buyers receive benefits from taking part in the market.
The market equilibrium maximises the economic well-being and welfare of both buyers and sellers.
What’s a consumer or producer surplus?
A consumer surplus is the amount a buyer is willing to pay - the amount he actually pays for a product.
Consumer surplus also reflects economic well being.
A producer surplus is the amount a seller is paid - the actual costs of production of that good.
Producer surplus measures the benefit to sellers of participating in a market.
What’s a total surplus?
Value or goods to buyers - the cost to sellers
Interprete Consumer Surplus
consumer surplus measures the benefit buyers receive from a good as the buyers themselves perceive it.
In most markets Consumer surplus reflect economic well-being - Assuming that consumers are rational and act in their own interest
On the level of the whole market, the well-being is reflected by the sum of the surplus experienced by all buyers.
What can be understand under the terms of Pareto efficiency and pareto improvements?
Pareto efficiency occurs when it is not possible to reallocate resources in such a way as to make one person better off without making anyone else worse off.
burrito improvement when an action makes at least one economic agent better off without harming another economic agent.
Efficiency of a competitive market
Free markets with intense competition between buyers allocate goods to the buyers that are valued good most measured by their willingness to pay.
Auf freien Märkten (mit intensivem Wettbewerb zwischen den Käufern) werden die Güter demjenigen Käufer zugeteilt, der die Güter am meisten schätzt, gemessen an der Zahlungsbereitschaft.
Free markets (with intense competition between sellers) allocate demand to the sellers that are able to supply the goods at the lowest cost.
In free markets the quantity is produced that maximizes the total surplus of consumers and producers.
On which side of the market equilibrium does trading occur?
Left side of the equilibrium quantity (because that´s where buyers and sellers can meet)
Are markets fair? If no, why not?
No markets are not fair
How would these phenomenas look if visualized in a graphic?
Elastic Demand and supply
Inelastic Demand, elastic supply
Inelastic demand and supply
Elastic Demand, inelastic supply
look on script
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