chapter_16 General Equilibrium and Economic Efficiency.ppt

文档介绍：Chapter 16
General Equilibrium and Economic Efficiency
1
Chapter 1
Topics to be Discussed
General Equilibrium Analysis
Efficiency in Exchange
Equity and Efficiency
Efficiency in Production
2
Chapter 1
Topics to be Discussed
The Gains from Free Trade
On Overview--The Efficiency petitive Markets
Why Markets Fail
3
Chapter 1
General Equilibrium Analysis
Partial equilibrium analysis presumes that activity in one market is independent of other markets.
4
Chapter 1
General Equilibrium Analysis
General equilibrium analysis determines the prices and quantity in all markets simultaneously and takes the feedback effect into account.
5
Chapter 1
General Equilibrium Analysis
A feedback effect is a price or quantity adjustment in one market caused by price and quantity adjustments in related markets.
6
Chapter 1
General Equilibrium Analysis
Two Interdependent Markets--Moving to General Equilibrium
Scenario
petitive markets of:
Videocassette rentals
Movie theater tickets
7
Chapter 1
DV
DM
Two Interdependent Markets: Movie Tickets and Videocassette Rentals
Price
Number
of Videos
Price
Number of
Movie Tickets
SM
SV
$
QM
QV
$
$
Q’M
S*M
Assume the government
imposes a $1 tax on
each movie ticket.
Q’V
D’V
$
General Equilibrium Analysis:
Increase in movie ticket prices
increases demand for videos.
8
Chapter 1
DV
DM
Two Interdependent Markets: Movie Tickets and Videocassette Rentals
Price
Number
of Videos
Price
Number of
Movie Tickets
SM
SV
$
QM
QV
$
The Feedback
effects continue.
$
Q*V
D*V
$
Q’M
D*M
$
Q*M
S*M
Q’V
D’V
$
D’M
Q”M
$
The increase in the price
of videos increases the
demand for movies.
9
Chapter 1
Observation
Without considering the feedback effect with general equilibrium, the impact of the tax would have been underestimated
This is an important consideration for policy makers.
Two Interdependent Markets: Movie Tickets and Videocassette Renta