Talk:Welfare economics
From Academic Kids
In writing this article I have tried to present the basic concepts of WE to non-economists in the first part of the article, then present some fundamental WE analysis for people with an economics background in the second half of the article. However, this article just skims the surface of WE. I have deliberately omitted WE concepts such as:
- compensated demand curves
- equivalent variation
- compensating variation
- arrows theorem
- the second best theorem
- general equilibrium vs partial equilibrium approaches to WE
- dynamic welfare optimization
- input-output models
- gini coefficient
- lorenz curve
- the welfare cost of monopoly
- the welfare cost of externalities
- the welfare cost of price discrimination
I think all of these are better handled as separate articles. Firstly, because they are not central to WE fundamentals, and secondly the article is already 9 computer screens long (which is 3 screens longer than my usual self imposed limit). mydogategodshat 03:30, 11 Feb 2004 (UTC)
In the article, price discrimination is listed as a possible source of economic inefficiency. It's been a while since I've studied this, but it seems to me that price discrimination should actually increase efficiency. A uniform price prevents some transactions that would be socially efficient, namely those where the potential buyer's value is higher than the seller's cost, but lower than the market price. Isomorphic 00:00, 3 Jul 2004 (UTC)
- Yes, price discrimination should generally increase economic efficiency as compared to flat monopoly pricing. Jrincayc 16:10, 4 Jul 2004 (UTC)
Marginal Rate of Transformation
(moved from village pump technical)
Could you please review the definition of the Marginal Rate of Transformation in the Welfare Economics section. It should be the Marginal Rate of Technical Substitution when it refers to the mix of factors of production used in a particular production process. It is the slope the isoquant. On the other hand, the Marginal Rate of Transformation is the slope of the Production Possibilities Frontier.
- Your descriptions of the MRT and the MRTS are accurate. Both come into play in Pareto efficiency. The marginal rates of technical substitution (also called the marginal rates of factor substitution) must be equal if a firm or industry is to achieve production efficiency. Further the marginal resource costs must equal the marginal revenue products for all production. This is the third criterion. In addition to this, The marginal rate of transformation (that is, the rate at which one product can be exchanged for another product in production) must be equal for all products. This is the second criterion. From what I can see, both descriptions in the article are accurate. mydogategodshat 06:47, 9 Jun 2005 (UTC)
