Surpluses, Transfers, Deadweight Loss And Blueberries
Abstract
The two Big Ideas around which an introductory microeconomics course should be constructed are efficiency and equity. Policy decisions generally affect both. This paper demonstrates that a simple analysis of government intervention in the blueberry market illustrates the concept of deadweight loss and the impact of market intervention on efficiency. The division of the deadweight loss, combined with transfers, provides the basis for weighing the impact on equity. A fuller understanding of these concepts demonstrates the need to balance equity and efficiency considerations in the public policy arena. These concepts and their application are well within the reach of introductory students.
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