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6 Cards in this Set
- Front
- Back
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Invisible Hand
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the idea that the free interaction of people in a market economy leads to a desirable social outcome (adam smith)
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competitive equilibrium model
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model that assumes utility maximization on the part of consumers and profit maximization on the part of firms, along with competitive markets and freely determined prices
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pareto efficient
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situation in which it is not possible to make someone better off w/out making someone else worse off
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1st theorem of welfare economics
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conclusion that a competetive market results in an efficient outcome. sometimes called the "invisible hand theorem" (definition of efficiency used here is pareto)
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income inequality
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disparity in levels of income among individuals in the economy
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deadweight loss
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loss in producer & consumer surplus due to an inefficient level of production
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