QUESTION ONE
Identify and discuss any five microeconomic drivers of economic growth.
Efficiency
This is when available resources are used to a maximum potential and wasting is not an option.
This occurs when they are skilled and resource conscious people are involved in manufacturing process.
Equity
This takes places when resources, income and wealth are sincerely and equally distributed within a community or state.
This is a result of fair and followed principles, regulations, stable political issues and a healthy economy.
Cost Minimization
This occurs when input value is well regulated and at a minimum so that price takers will flexible when satisfying their needs and wants.
This is a result of absolute efficiency within an organisation. …show more content…
What are the salient features of the third fundamental theorem of welfare economics?
Fist Fundamental Theorem of Welfare Economics
This fundamental theorem suggests that any competitive equilibrium leads to a Pareto efficient allocation of resources
Pareto efficiency is social outcome is Pareto efficient, there is no other feasible outcome which is Pareto superior to it. For example outcome A is Pareto superior to outcome B if no one finds A worse than B and at least one person finds A strictly better than B. The existence of a competitive equilibrium means that supply equals demand and thus the market is made. Alternatively, this could be seen as a Walrasian equilibrium where net demand equals zero.
IMPLICATIONS OF THE FIRST WELFARE THEOREM
A competitive private market carries the Pareto efficiency therefore rewards from exchanges will be exhausted.
A competitive market is a standard which is used to critic genuine market outputs and this is conducted by policy-makers.
This theorem suggests that there are no market imperfections such as monopoly, externalities and public goods
This theorem also explains the invisible …show more content…
The third hypothesis is right around a simple end product of the second. For if there is one Pareto unrivalled assignment, then there is ordinarily additionally another Pareto predominant distribution that is on the Pareto boondocks thus Pareto productive.
With a specific end goal to move to this proficient and unrivalled designation, foundation the ideal market framework that produces it, assuming that the states of the second hypothesis are altogether met so that such a framework does exist.
The main thing that must be indicated is that there truly is a Pareto effective portion
At the point when an economy is populated by operators with social inclinations, showcase splendidly focused or with some level of flaw results are Pareto Ideal, impartial, and Special third hypothesis asserts that it is conceivable to change the first financial framework by having more broad flawlessly focused markets, and to do as such in a way which creates a balance portion that is Pareto better than the first portion.
QUESTION THREE
In no more than 100 words for each, explain the following
Identify and discuss any five microeconomic drivers of economic growth.
Efficiency
This is when available resources are used to a maximum potential and wasting is not an option.
This occurs when they are skilled and resource conscious people are involved in manufacturing process.
Equity
This takes places when resources, income and wealth are sincerely and equally distributed within a community or state.
This is a result of fair and followed principles, regulations, stable political issues and a healthy economy.
Cost Minimization
This occurs when input value is well regulated and at a minimum so that price takers will flexible when satisfying their needs and wants.
This is a result of absolute efficiency within an organisation. …show more content…
What are the salient features of the third fundamental theorem of welfare economics?
Fist Fundamental Theorem of Welfare Economics
This fundamental theorem suggests that any competitive equilibrium leads to a Pareto efficient allocation of resources
Pareto efficiency is social outcome is Pareto efficient, there is no other feasible outcome which is Pareto superior to it. For example outcome A is Pareto superior to outcome B if no one finds A worse than B and at least one person finds A strictly better than B. The existence of a competitive equilibrium means that supply equals demand and thus the market is made. Alternatively, this could be seen as a Walrasian equilibrium where net demand equals zero.
IMPLICATIONS OF THE FIRST WELFARE THEOREM
A competitive private market carries the Pareto efficiency therefore rewards from exchanges will be exhausted.
A competitive market is a standard which is used to critic genuine market outputs and this is conducted by policy-makers.
This theorem suggests that there are no market imperfections such as monopoly, externalities and public goods
This theorem also explains the invisible …show more content…
The third hypothesis is right around a simple end product of the second. For if there is one Pareto unrivalled assignment, then there is ordinarily additionally another Pareto predominant distribution that is on the Pareto boondocks thus Pareto productive.
With a specific end goal to move to this proficient and unrivalled designation, foundation the ideal market framework that produces it, assuming that the states of the second hypothesis are altogether met so that such a framework does exist.
The main thing that must be indicated is that there truly is a Pareto effective portion
At the point when an economy is populated by operators with social inclinations, showcase splendidly focused or with some level of flaw results are Pareto Ideal, impartial, and Special third hypothesis asserts that it is conceivable to change the first financial framework by having more broad flawlessly focused markets, and to do as such in a way which creates a balance portion that is Pareto better than the first portion.
QUESTION THREE
In no more than 100 words for each, explain the following