Please enable JavaScript.

Coggle requires JavaScript to display documents.

CONSUMERS, PRODUCERS, AND THE EFFICIENCY OF MARKETS, WTS: The lowest…

- - - - 1.Fall in CS due to buyers leaving the market
      - 2.Fall in CS due to remaining buyers paying the higher P
- - - - 1.Fall in PS due to sellers leaving market
      - Fall in PS due to remaining sellers getting lower P
- - - - Market power: a single buyer or seller (small
        group) control market prices
      - Externalities: decisions of buyers and sellers affect people who are not participants in the market at all
    - - • Two important assumptions
        
        Markets are perfectly competitive
        
        Outcome in a market matters only to the buyers and sellers in that market
      - • When these assumptions do not hold
        
        – Q will be over or below eq’m Q
        
        – “Market equilibrium is efficient” may no longer be true