Summary ECON 101 - Efficiency and Equity

ECONOMICS 101
Efficiency and Equity

,Tutor Profile
Ntuthuko Hlela
- Economics Tutor at the University of KwaZulu Natal [UKZN].
- Member of the Golden Key Society for 2 consecutive years.
- Top Economics student at the UKZN for 3 consecutive years.

,Table of Content
●Efficiency and Equity
1) Resource allocation methods
2) Benefit, cost and surplus
3) Is the competitive market efficient ?
4) is the competitive market fair?

, Introduction
In a market, a buyer will buy what he/she wants and a firm produces wha
demanded. You want a pizza, a restaurant will produce a pizza for you.
Buyers want satisfaction and sellers want profit. Everyone is driven by the
self-interests. Markets coordinate these self-interested choices. But do
markets do a good job? Do they allocate resources efficiently? Markets
generate inequality. You can afford a gold ring, however, a mine worker ca
not even afford a fake bronze ring. Is this fair?

Efficiency and fairness [or equity] are two dimensions of the social interes
So our central question in this chapter is: Do markets operate in the socia
interest?