Efficiency and Equilibrium in Competitive Markets

In this video lecture we seek to understand what makes equilibrium price and quantity the most efficient price and quantity combination in a competitive market. Economic efficiency is defined, and we examine the effect on efficiency of any quantity of output less than or greater than the equilibrium quantity, at which marginal benefit equals marginal cost.

[Tinulchik]

This is exactly the kind of lecture I was hoping to find. The lecturer made this topic comprehensible. Thank you!

[ryanwatt]

Surely in the second example the Consumer surplus should be greater than the producer surplus? The consumers are paying far less than it costs for the producers to produce the good?

[bhavinsundar]

In this scenario, the available quantity of movie tickets is constrained, possibly due to factors like the fixed number of seats in a theater or limited showtimes. As a result, even if the price were to change, the supply remains relatively constant, leading to a low or negligible PES. This lack of responsiveness in quantity supplied can be attributed to the inherent constraints in the availability of movie tickets, making them a classic example of a product with low price elasticity of supply (PES = 0).

[drummerEight]

Wow, I understand it better now. So, here goes my Quiz!

[qwertyll]

This video is very informative :D it's all clear now *0*

[iamdabossofnepal]

so consumers are always made worse off by inefficient allocation?

[WilliamBaumannIII]

Less boring than my professor. I'll take it!