Microeconomics,, 16th Canadian Edition

adding and vertically, we derive society’s marginal benefit curve, The marginal cost of providing the public good is shown by MC ...

Asymmetric Information Information is, of course, a valuable commodity, and markets for information and expertise are well devel ...

In general, moral hazard exists when one party to a transaction has both the incentive and the ability to behave in a way that s ...

transaction in his or her favour. Codes of professional ethics and licensing and certification practices, both governmental and ...

many economists argued that the expectation of similar future policies would lead the banks to continue their excessively risky ...

company). On the other side, someone who knows that she is at low risk and pays a higher price than the amount warranted by her ...

expected from an average one-year-old car on the road. Consider his theory. Any particular model year of car will include a cert ...

would then conduct more transactions, for two reasons. First, owners wanting to sell good used cars would be more likely to sell ...

Owners have an incentive to keep good-quality used cars because it is difficult to convince buyers that a used car is not a “lem ...

Summary To summarize, the following four situations result in market failures and, at least in principle, provide a rationale fo ...

16.4 Broader Social Goals Even if the free-market system were to generate an allocatively efficient outcome, there are broader s ...

demand relative to supply, such as high school graduates without work experience, earn much less. Such differentials in income, ...

that the pursuit of allocative efficiency is a good thing. It is important to understand, however, that the goal of a more equit ...

on the trip. Thus, to get a litre of water to its destination, more than a litre of water has to be removed from the reservoir. ...

Measuring the efficiency costs of redistribution is an important area of economic research. One result from this research is tha ...

Preferences for Public Provision Police protection and justice could, in principle, be provided by private markets. Security gua ...

European countries, for example, choose public provision of daycare services, while in the United States these services are almo ...

Protecting Individuals from Others People can use and even abuse other people for economic gain in ways that members of society ...

Paternalism Members of society, acting through government, often seek to protect adult (and presumably responsible) individuals, ...

Social Responsibility In a free-market system, if you can pay another person to do things for you, you may do so. If you persuad ...