Microeconomics · free preview
Efficiency, Equity and the Limits of Exchange
Efficient allocations form a frontier of many splits of the same pie, societies judge them by fairness criteria alongside size, and the real tradeoff is between the size of the pie and the shape of its slices.
1. One pie, many splits
One pie, many splits
2. What people mean by fair
What people mean by fair
3. The leaky bucket
The leaky bucket
4. Where efficiency alone is not enough
Where efficiency alone is not enough
5. Efficiency versus equity
A market clears efficiently, generating 2160 dollars of total surplus, but 90 percent goes to sellers who are wealthy and 10 percent to poor buyers. A proposal redistributes surplus toward buyers at the cost of shrinking total surplus to 2000 dollars. Which statement is correct?
6. The leaky bucket
Okun's leaky bucket metaphor describes what exactly?
7. The size of the leak
A program raises 500 dollars in taxes to deliver 400 dollars in benefits. Compute the fraction of each raised dollar that leaks away, as a percentage, and write the number.
8. A lopsided split
A market clears efficiently with total surplus of 2,160 dollars, but 90 percent lands with sellers. Which statement is right?
9. The bucket that leaks
Okun's leaky bucket describes what exactly?
10. A leakier program
A program raises 600 dollars in taxes to deliver 450 dollars in benefits. Compute the fraction of every dollar that leaks away, in percent, and write the number.
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