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Welfare economics - Discussion and Encyclopedia Article. Who is Welfare economics? What is Welfare economics? Where is Welfare economics? Definition of Welfare economics. Meaning of Welfare economics. Welfare economics is a branch of economics that uses microeconomic techniques to simultaneously determine the allocational efficiency of a macroeconomy and the income distribution consequences associated with it.
It attempts to maximize the level of social welfare by examining the economic activities of the individuals that comprise society. Welfare economics is concerned with the welfare of individuals, as opposed to groups, communities, or societies because it assumes that the individual is the the basic unit of measurement. It also assumes that individuals are the best judges of their own welfare, that people will prefer greater welfare to less welfare, and that welfare can be adequately measured either in dollars (or some other unit of currency) or as a relative preference.
Social welfare refers to the overall utilitarian state of society. It is often defined as the summation of the welfare of all the individuals in the society. Two approaches Efficiency Income distribution Criticisms. An Intermediate Introduction. Thomas F. Rutherford Department of Economics University of Colorado tom@gams.com * This research supported by the GAMS Applied General Equilibrium Research Fund.
The software described here operates only with GAMS 2.25.085 or later on the PC, shipped in July, 1995. Contents Return to the MPSGE home page 1. This document describes a mathematical programming system for general equilibrium analysis named MPSGE which operates as a subsystem to the mathematical programming language GAMS. MPSGE separates the tasks of model formulation and model solution, thereby freeing model builders from the tedious task of writing model-specific function evaluation subroutines.
The present paper is intended for students who have completed two semesters of study in microeconomics. The remainder of this paper is organized as follows. 2. A central idea underlying most microeconomic theory is that agents optimize subject to constraints. Preferences are relationships between alternative consumption "bundles". Microeconomics - Production Possibility Frontier. Author: Geoff Riley Last updated: Sunday 23 September, 2012 A production possibility frontier (PPF) is a curve or a boundary which shows the combinations of two or more goods and services that can be produced whilst using all of the available factor resources efficiently.
We normally draw a PPF on a diagram as concave to the origin. This is because the extra output resulting from allocating more resources to one particular good may fall. I.e. as we move down the PPF, as more resources are allocated towards Good Y, the extra output gets smaller – and more of Good X has to be given up in order to produce the extra output of Good Y. This is known as the principle of diminishing returns. Combinations of output of goods X and Y lying inside the PPF occur when there are unemployed resources or when the economy uses resources inefficiently.
Point D is unattainable at the moment because it lies beyond the PPF. The PPF does not always have to be drawn as a curve. External Costs Free Goods. Production Possibility Frontier. Economics > Production Possibility Frontier The Production Possibility Frontier Consider the case of an island economy that produces only two goods: wine and grain. In a given period of time, the islanders may choose to produce only wine, only grain, or a combination of the two according to the following table: Production Possibility Table The production possibility frontier (PPF) is the curve resulting when the above data is graphed, as shown below: Production Possibility Frontier The PPF shows all efficient combinations of output for this island economy when the factors of production are used to their full potential.
The shape of this production possibility frontier illustrates the principle of increasing cost. Suppose a new technique was discovered that allowed the wine producers to double their output for a given level of resources. Shifted Production Possibility Frontier PPF for Very Similar Products Copyright © 2002-2010 NetMBA.com. Price Elasticity of Supply. 5.3 Price Elasticity of Supply Learning Objectives Explain the concept of elasticity of supply and its calculation. Explain what it means for supply to be price inelastic, unit price elastic, price elastic, perfectly price inelastic, and perfectly price elastic.
Explain why time is an important determinant of price elasticity of supply. The elasticity measures encountered so far in this chapter all relate to the demand side of the market. Suppose the demand for apartments rises. This is illustrated in Figure 5.10 "Increase in Apartment Rents Depends on How Responsive Supply Is". Figure 5.10 Increase in Apartment Rents Depends on How Responsive Supply Is The more responsive the supply of apartments is to changes in price (rent in this case), the less rents rise when the demand for apartments increases. We measure the price elasticity of supplyThe ratio of the percentage change in quantity supplied of a good or service to the percentage change in its price, all other things unchanged.
Economics: A Contemporary Introduction. Economics. The International Society for Ecological Economics. Latest News. Center for the Advancement of the Steady State Economy. The Economics of Capital Punishment--Posner. The recent execution by the State of California of the multiple murderer Stanley "Tookie" Williams has brought renewed controversy to the practice of capital punishment, which has been abolished in about a third of the states and in most of the nations that the United States considers its peers; the European Union will not admit to membership a nation that retains capital punishment.