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Please answer this

gerrandesquire
Posts: 1,258
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9/7/2011 1:34:05 PM
Posted: 5 years ago
D (pd)= 200-4P
S (Ps)=4P

Impose a specific tax of Rs. 10. Who suffers more and why?
Calculate Consumer Surplus, Producer surplus and dead weight loss.

Please, just tell me how to work on this.
Wnope
Posts: 6,924
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9/7/2011 1:51:00 PM
Posted: 5 years ago
At 9/7/2011 1:34:05 PM, gerrandesquire wrote:
D (pd)= 200-4P
S (Ps)=4P

Impose a specific tax of Rs. 10. Who suffers more and why?
Calculate Consumer Surplus, Producer surplus and dead weight loss.

Please, just tell me how to work on this.

Do your own Econ 101 homework.
darkkermit
Posts: 11,204
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9/7/2011 3:22:34 PM
Posted: 5 years ago
Started half way through then got bored. The supply curve is going to shift right. This means the supply curve is now 4P-10, since for example $25 price will fell like a 10 price. If you graph it out, draw a line at P1 and P2, horizontal and vertical. You'll notice a triangle between the supply curves (demand curve is one edge, the original supply curve is the second edge, the vertical line at the new price is the third edge). This is the deadweight loss. You'll also notice that the horizontal line for P2 splits up the triangle. Directly above the line is the consumer loss. Below the split is the supplier loss. You should be able to solve it from here. Just find the length of each side of the triangle, and use the basic equation to find the triangle length.
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darkkermit
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9/7/2011 3:33:34 PM
Posted: 5 years ago
I just realized you could use deadweight loss to show how insane logicalfalalcies idea of labor cost theory, not that there weren't a thousand other holes in his theory.
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logicalFallacy
Posts: 176
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9/8/2011 3:09:42 AM
Posted: 5 years ago
At 9/7/2011 3:33:34 PM, darkkermit wrote:
I just realized you could use deadweight loss to show how insane logicalfalalcies idea of labor cost theory, not that there weren't a thousand other holes in his theory.

It is funny how the world's leading economists couldn't find holes in the theory when it was debated in the leading economics journal but you think you found the hole in this romper room economics post.

Pareto efficiency, which eliminates deadweight loss, can only happen in a market with perfect competition. That will never happen on its own. What Lange demonstrated, however, was that the only way you can get perfect competition and pareto efficiency is by deliberately making the market perfectly competitive which can only be done through market socialism, not capitalism.
:darkkermit
[Using a dictionary] has got to be the most retarded thing i've heard
Ragnar_Rahl
Posts: 19,297
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9/8/2011 4:03:09 AM
Posted: 5 years ago
How exactly does giving people nothing to compete over make them compete "Perfectly?"

When someone says they will create perfect competition to implement their system, that's like someone telling me their new idea for a zeppelin involves creating an ideal gas.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
darkkermit
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9/8/2011 4:43:57 AM
Posted: 5 years ago
At 9/8/2011 3:09:42 AM, logicalFallacy wrote:
At 9/7/2011 3:33:34 PM, darkkermit wrote:
I just realized you could use deadweight loss to show how insane logicalfalalcies idea of labor cost theory, not that there weren't a thousand other holes in his theory.

It is funny how the world's leading economists couldn't find holes in the theory when it was debated in the leading economics journal but you think you found the hole in this romper room economics post.

Its funny how the world's leading economists couldn't find holes in the theory,when R_R and I have pointed to the many holes. It's also funny how market socialism has never been implemented correctly, and has yet to be taught. Your basically relying on the basis that they've been published. Guess what, Austrian economists and libertarian economicst have been published too, sometimes even in "mainstream" journals (gasp!).

Debate me in a formal debate if your so confident.

You stated that the wealth would not decrease If everyone had the same salary, but there is obviously a reduction in wealth based on supply and demand of labor. Your basically setting a cap on wages, so you get shortages or lower quality services. Try getting the same supply (and quality) of surgeons, CEOs actors/actresses and doctors under your system. One can even calculate this deadweight loss.

Pareto efficiency, which eliminates deadweight loss, can only happen in a market with perfect competition.

Perfect competition is overrated. It's a good introduction in microeconomics and static models. However it fails to reveal the mechanics of change. For example, If new ideas and inventions are created, this creates economic growth, choice and prosperity. We are much better off with current technology then we are with past technology. However, companies that implement these, are able to give their company an edge. For example, we are better off with Google, Microsoft, and Apple products even though they are not in "perfect competition". Also, monopolies have a tendency to not to last and lose their monopoly power over time. This is the market at work. New ideas and technology is implemented through entrepreneurship.

It also fails to take into account economics of scale. Sure economics of scale does create barriers to entry, but products can be made a lot cheaper through economics of scale then through perfect competition. Is it better to have a giant power plant or for many competitors to enter the market but unable to achieve the same economics of scale and expensive prices?

Also, according to the U theory of the firms, oligopolies tend to spend more time into R&D, which is good for economic prosperity.

That will never happen on its own. What Lange demonstrated, however, was that the only way you can get perfect competition and pareto efficiency is by deliberately making the market perfectly competitive which can only be done through market socialism, not capitalism.

See what I said above.

Near perfect competition is achieved through many firms. This is done through ability for people to enter the marketplace. Perfection competition prices can actually even be achieved through Bertrand competition, even if there are only two firms.
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logicalFallacy
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9/8/2011 4:52:52 AM
Posted: 5 years ago
At 9/8/2011 4:03:09 AM, Ragnar_Rahl wrote:
How exactly does giving people nothing to compete over make them compete "Perfectly?"

Perfect competition is a market where no market player has the power to set price above equilibrium and earn an economic profit. So price = cost. That will only happen in a socialist market economy.
:darkkermit
[Using a dictionary] has got to be the most retarded thing i've heard
darkkermit
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9/8/2011 5:00:19 AM
Posted: 5 years ago
At 9/8/2011 4:03:09 AM, Ragnar_Rahl wrote:
How exactly does giving people nothing to compete over make them compete "Perfectly?"

When someone says they will create perfect competition to implement their system, that's like someone telling me their new idea for a zeppelin involves creating an ideal gas.

I'm assuming that he's referring to the Walrasian auction, which in looking at it, seems to fail the transaction cost problem. Imagine being asked millions of questions about millions of different prices and being asked how much you think you would be willing to buy or willing to sell?
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darkkermit
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9/8/2011 5:03:22 AM
Posted: 5 years ago
At 9/8/2011 4:52:52 AM, logicalFallacy wrote:
At 9/8/2011 4:03:09 AM, Ragnar_Rahl wrote:
How exactly does giving people nothing to compete over make them compete "Perfectly?"

Perfect competition is a market where no market player has the power to set price above equilibrium and earn an economic profit. So price = cost. That will only happen in a socialist market economy.

In a world with uncertainty, such a system is impossible. Nor is price equally cost necessarily desirable. If a person can reduce the costs more then a price reduction, one is better off then If there is no reduction in costs and price remains the same.
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Ragnar_Rahl
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9/8/2011 5:10:06 AM
Posted: 5 years ago
At 9/8/2011 4:52:52 AM, logicalFallacy wrote:
At 9/8/2011 4:03:09 AM, Ragnar_Rahl wrote:
How exactly does giving people nothing to compete over make them compete "Perfectly?"

Perfect competition is a market where no market player has the power to set price above equilibrium and earn an economic profit. So price = cost. That will only happen in a socialist market economy.
Perfect competition is a market where no market actor can affect the price at all, according to wiki (which is pretty much by definition a contradiction, so I can see why you'd avoid it).

"Economic profit" is a concept which cannot be calculated as to real transactions, let alone abolished.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
mafiagame3
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9/8/2011 8:08:02 AM
Posted: 5 years ago
At 9/8/2011 3:09:42 AM, logicalFallacy wrote:
the only way you can get perfect competition and pareto efficiency is by deliberately making the market perfectly competitive which can only be done through market socialism, not capitalism.

LMAO I'd love to hear how socialism can mandate perfect competition. Do explain.
mafiagame3
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9/8/2011 8:11:40 AM
Posted: 5 years ago
perfect competition is a notion that only exists in theory. Industries can approach perfect competition but they never will fullly reach it. That's like saying you can count to infinity or that the market can be in equilibrium or that donald trump has real hair.

It's ludicrous and even more so to say that government could force it into existence. They could certainly split apart larger firms and put the market closer to perfect competition but they never could magically make it happen.
darkkermit
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9/8/2011 3:27:12 PM
Posted: 5 years ago
At 9/8/2011 8:11:40 AM, mafiagame3 wrote:
perfect competition is a notion that only exists in theory. Industries can approach perfect competition but they never will fullly reach it. That's like saying you can count to infinity or that the market can be in equilibrium or that donald trump has real hair.

It's ludicrous and even more so to say that government could force it into existence. They could certainly split apart larger firms and put the market closer to perfect competition but they never could magically make it happen.

In theory you can enforce the prices, (pareto optimality and productive efficiency) but not actual perfect competition.
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