Efficiency, Equity And Market Failure And Success In Cocktail Party Economics

715 Words 3 Pages
The system of a market, formed through the supply and demand of goods, can be divided amongst different types (types of what?), that can be classified based on the competition the supplier has for allocating his/her goods. Two commonly known divisions are the free market and the competitive market, as discussed in Cocktail Party Economics, written by Evelin Adomait and Richard Maranta. The writers argue that, no matter how efficiently a perfectly functioning competitive market is working, it is unlikely that market’s outcomes will be equitable. In order to prove this, I this paper will be looking at the efficiency, equity and market failure/success in both the cases of the provision of public education and the financial markets such as housing. …show more content…
In this case, the inequitable schooling systems are very much efficient. They are inequitable because the richer families, even with the funding of public education, can afford external programs such as tutors and extracurricular activities to help their children succeed. This, therefore, proves the efficiency of the system due to the fact that the efforts put in by parents effectively correlates with the outcome of the student’s marks. Another example of efficiency in the educational system is the ideology that the work put in by students, is usually reflected in the marks he or she receives throughout the school …show more content…
This is a failed market that attempts to reach equitable status, but by doing so loses efficiency; thus resulting in an instant market failure. In order to benefit the less fortunate, the government will then issue rent control legislations, usually seen through maximums on the rent price. This legislation, however greatly it benefits the consumer, is inefficient and may hurt the business of the supplier. Professor Adomait affirms that “this has the very bad result of driving owners of rental housing out of business”. Once we drive suppliers away from the market, supply will drop, and a surplus of demands will increase. This market failure can be allocated to the compromise of efficiency for the gain of

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