Discussion 2

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Algonquin College *

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Economics

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Jan 9, 2024

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Uploaded by EarlGrasshopperPerson19

An exchange between a buyer and seller occurs usually when the exchange creates both a consumer surplus and a supplier surplus. Market efficiency occurs when consumer and supplier surplus are maximized. However, in exchanges between buyers and sellers, should society be only concerned with market efficiency? For this discussion, answer the following questions and respond to at least two classmates. 1a) Describe a personal experience of when you purchased a product or service whereby you feel you maximized surplus as a consumer and b) why this qualifies as being an example of consumer surplus. (2 marks) Answer as follows: 1a) My personal experience is as follows: I typically do most of my toy shopping for my children during Boxing Day sales for the following year whether it for their birthday, Christmas, or rewards for whatever reason. This allows me to get toys and items they want at a discounted price. 1b) This qualifies as an example of consumer surplus because I am saving thousands of dollars purchasing these items while they are on sale. Since most of the prices go up just before Christmas, and then go down right afterwards to get the product out. The difference between purchasing the items a few days after a holiday allows me to have a consumer surplus. 2a) My example of a positive externality experience is as follows : My family and I volunteer our time at our local Retirement home. We go twice a month to help those who are in need, whether it is sitting and listening, playing board games, or even helping organize their rooms. 2b) This is an example of a positive externality because this allows us to help in our community, this allows us to take the time and help those who may just need a friend in need. With my older children they get to learn new things as well as teach new thing. Currently my 11-year-old son is teaching the residents how to use a smartphone. Showing them how to Facetime, reply to texts/emails and share photos. 2c) Economists would view this as market inefficiency because not everyone would have time to give to help those in need. They could also look at it as why teach a old dog new tricks. I believe that by starting this early in my children life that they will keep giving back to the community their in no matter where life takes them. 2. The lesson notes describe both positive and negative externalities. An interesting situation occurs when there is a positive externality. This is interesting because economists state this is a result of market inefficiency or failure. a) Combine the lesson notes with some of your own research and your own experiences to describe when you were part of a transaction that resulted in a positive externality, b) State why the transaction resulted in a positive externality, and c) State why from an economist's viewpoint this would be considered market inefficiency. (2 marks) *** You cannot use the example of a violinist or musician providing music free of charge in a restaurant or other setting.

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