Quick Tip on Monopoly vs PC: Allocative and Productive Efficiency
Quick Tip on Effects of Tariff on Imports (Macro - International Trade)
This video goes through a step-by-step analysis of how the equilibrium output and price is determined under the Monopoly and Perfect Competition.
The performance of these two market structures are also explored in terms of their ability to achieve allocative efficiency and productive efficiency.
Allocative efficiency refers to an efficient allocation of resources where societal welfare is maximized. The condition for this to occur is where Price = Marginal Cost (P=MC).
Productive efficiency refers to the production of good using the least-cost combination of input. The condition for this to be fulfilled is at minimum Long Run Average Cost curve (min LRAC).
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Quick Tips on Consumer and Producer Surplus (Micro)
This video gives you a step-by-step analysis of the effects of tariff imposed on imports.
To understand the diagram in this video, it is advisable to have a quick recap on Consumer and Producer Surplus which is also available in another recorded video.
Focus is to analyze how the loss of Consumer Surplus is redistributed to various sectors of the economy such as Producers (in the form of increase in Producer Surplus) and the Government (in the form of tax revenue). The deadweight loss from the imposition of tariff is also derived.
Tips: Is it necessary to draw the tariff diagram just to show the fall in imports? No, the diagram is required only if it is meant to show the impact it has on the economy such as the deadweight loss or effect on consumers or producers.
Here’s an explanation of how consumer and producer surplus is derived.
Note: Consumer Surplus is the difference between what consumers are willing and able to pay AND what they actually pay. Producer Surplus is the difference between what producers received AND what they they are willing to supply.