Efficient Equilibrium

… a core term used in Economic Analysis and Atlas102

Definition

Alex Tabarrok (reference below) describes the efficient equilibrium as the point at which private demand intersects the Social Cost curve. When there is a significant External Cost associated with the activity, the efficient equilibrium will be different from the Market Equilibrium, the intersection of demand and the supply curve  that reflects the Private Cost of provision. (See Externality.)

ExernalCostsAtlas topic, subject, and course

Externalities (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Sources

The Economist, Deadweight cost/loss, Economics A-Z, at http://www.economist.com/economics-a-to-z/d#node-21529719, accessed 6 May 2016.

Alex Tabarrok, minute 7:00 to 9:15 of An Introduction to Externalities (12-minute video), Principles of Economics – Microeconomics, Marginal Revolution University, at http://www.mruniversity.com/courses/principles-economics-microeconomics/externalities-definition-pigovian-tax, accessed 6 May 2016.

Page created by: Ian Clark, last modified 6 May 2016.