Presentation on theme: "Lecture 13-14: Welfare and Social Choice"— Presentation transcript:
1 Lecture 13-14: Welfare and Social Choice Charit TingsabadhM.Sc. Programme in Environmental and natural resource economicsSemester 1/2006
2 Outline From positive economics to normative economics What is being comparedMeasures of welfareExamplesEmpirics
3 Subsidy: a payment for the pruchase of a good; the opposite of a tax. Key ConceptsConsumer surplus: the difference between what consumers are willing to pay and the price they pay for it. Calculated as the area under the demand curve and above the market price up to the quantity consumers buy.Producer surplus: the difference between the amount for which a good sells and the minimum amount necessary for sellers to be willing to produce the good.Deadweight loss: a net reduction in welfare from losses of surplus by one group that are not offset by gains to another group.Subsidy: a payment for the pruchase of a good; the opposite of a tax.Tariff: a tax levied on imported goods.Quota: a statutory limit on the amount imported.Rent seeking: effort and spending done to gain rent or profit from government action.
4 Applying the Competitive Model Perloff, Microeconomics 3rd edition Chapter 9Applying the Competitive ModelPerloff, Microeconomics 3rd edition