Brady's Eco Home

1.                 Describe efficiency from the perspective of an economist.  Efficiency as defined in our textbook is “the property of a resource allocation of maximizing the total surplus received by all members of society”. In a free market, this is most clearly demonstrated by the equilibrium price which is the intersection between the supply and demand curves. 2.                 Why are producer and consumer surpluses important in determining market equilibrium?  Producer and consumer surpluses can both be determined by market equilibrium and can determine market equilibrium in a free market. These surpluses can be looked at in terms of efficiency and equality when viewed by policy makers to determine the “economic well-being of everyone in society”. 3.         Should market effic...

How does this relate to the theories from the chapter?  The Venezuelan government tried to put price ceilings in place on staple foods and those price ceilings were binding. Since there was no profit to be made by the local farmers of these products, the farmers stopped growing as much of theses products. Because of this, perhaps some hording (including sales of these goods on the black market) and a bad harvest season due to weather, there became a shortage of these staple goods in the market. Because of this, the government was forced to import certain goods that would normally be supplied locally, and shortages continued. Now consider a different case.  After Hurricane Katrina speculators brought in bottled water but charged quite a lot for it.  What might have happened had price controls been imposed?  Where does the concept of fairness fit into this theory?  If similar price controls (ceilings) had been put in place on bottled water post Katrina, it is h...

In many large cities, you can now use your cell phone to call Uber or Lyft instead of hailing a taxi.  Would you expect this to affect the prices of taxi medallions (that is really the supply of taxis)?  Why or why not?  Talk about supply and demand curves in your answer. Make sure you can draw them! I would expect the price of taxi medallions to decrease as well as the supply of taxis because the demand for taxis will decrease. Fewer drivers will want to become Taxi drivers and instead, more drivers will decide to work for Lyft or Uber because the demand is higher. Because the demand for Lyft and Uber exceeds the current supply, there are market incentives in place to increase the supply of Uber and Lyft drivers. Can you think of an example where you watched the supply of a good or service change rapidly?  (For example, a new hotel or restaurant opened.)  Based on the chapter what would you expect to see happen? Why? At the beginning of this ski season at Co...