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5. Efficiency and Equity in Competitive Markets

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Allocative Efficiency, Productive Efficiency, and Equality

Consumer Surplus and Willingness to Pay

Producer Surplus and Willingness to Sell

Economic Surplus and Efficiency

Market Equilibrium

Shifts in the Demand Curve

Shifts in the Supply Curve

Positive and Normative Analysis

People Respond to Incentives

Externalities: Social Benefits and Social Costs