1. Under what conditions and assumptions do markets maximize social welfare? 2. The maximization of social welfare in this model is defined as the maximization of consumer and producer surplus. Whose welfare is included in this interpretation of social welfare, and whose is excluded? 3. Do you think that social efficiency (defined as the maximization of consumer and producer surplus) is always an appropriate tool for analyzing the net impact of different policies? - Can you think of some policy situations in which social efficiency is a sufficient measure for determining which policies should be enacted? Explain. - Can you think of some policy situations in which social efficiency would be an inappropriate goal of policy discussions? Explain.
1. Under what conditions and assumptions do markets maximize social welfare?
2. The maximization of social welfare in this model is defined as the maximization of
3. Do you think that social efficiency (defined as the maximization of consumer and producer surplus) is always an appropriate tool for analyzing the net impact of different policies?
- Can you think of some policy situations in which social efficiency is a sufficient measure for determining which policies should be enacted? Explain.
- Can you think of some policy situations in which social efficiency would be an inappropriate goal of policy discussions? Explain.
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