Nilsdejongh
Badges: 0
Rep:
?
#1
Report Thread starter 5 years ago
#1
Currently writing an essay on the efficiency and the price mechanism.

I'm looking at the allocative efficiency diagram. In the attached diagram i'm talking about an inefficient allocation situation - if suppliers could restrict the output from Q* to Q1 and hence create an inefficient allocation. (Already mentioned Efficient allocation is Q* where Price = MC etc)


-Are the Consumer and Producer Surplus' correct for the change in quantity to Q1?

-Is the Grey triangle correct? (Net loss of economic welfare?) Could this be described as the deadweight loss?

-Is there any examples or real life situations in which this sort of thing has happened? (Applying situations would gain some marks for application i guess)

Is this price discrimination? If so what could i say about it?

Thankyou!!!
Name:  Screen Shot 2014-11-06 at 15.03.38.png
Views: 65
Size:  48.6 KB
0
reply
Nilsdejongh
Badges: 0
Rep:
?
#2
Report Thread starter 5 years ago
#2
anybody?
0
reply
ArcticSlayer
Badges: 14
Rep:
?
#3
Report 5 years ago
#3
http://www.tutor2u.net/blog/index.ph...rt-electricity

This link looks useful ^
0
reply
gr8wizard10
Badges: 21
Rep:
?
#4
Report 5 years ago
#4
(Original post by Nilsdejongh)
Currently writing an essay on the efficiency and the price mechanism.

I'm looking at the allocative efficiency diagram. In the attached diagram i'm talking about an inefficient allocation situation - if suppliers could restrict the output from Q* to Q1 and hence create an inefficient allocation. (Already mentioned Efficient allocation is Q* where Price = MC etc)


-Are the Consumer and Producer Surplus' correct for the change in quantity to Q1?
From the graph you've shown, yes.

(Original post by Nilsdejongh)
-Is the Grey triangle correct? (Net loss of economic welfare?) Could this be described as the deadweight loss?
Yes, that is the dead weight loss.

(Original post by Nilsdejongh)
-Is there any examples or real life situations in which this sort of thing has happened? (Applying situations would gain some marks for application i guess)
Plenty, think OPEC. Restricting global oil supply to artifically raise prices. Collustion = re-enactment of monopolistic behaviour.

(Original post by Nilsdejongh)
Is this price discrimination? If so what could i say about it?
No, it isn't price discrimination, as all users in this case are essentially still paying one price. Although, as you rightly said it is an economically inneficient allocation of resources.
2
reply
Nilsdejongh
Badges: 0
Rep:
?
#5
Report Thread starter 5 years ago
#5
Legend! How do i go about giving you some REP?
(Original post by Anonynous)
From the graph you've shown, yes.



Yes, that is the dead weight loss.



Plenty, think OPEC. Restricting global oil supply to artifically raise prices. Collustion = re-enactment of monopolistic behaviour.



No, it isn't price discrimination, as all users in this case are essentially still paying one price. Although, as you rightly said it is an economically inneficient allocation of resources.
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

With HE fairs postponed, would a virtual HE fair be useful?

Yes (80)
61.54%
No (50)
38.46%

Watched Threads

View All