Econ 106 1st Edition Lecture 10Outline of Last Lecture I. EquilibriumII. Price CeilingIII. Price FloorOutline of Current Lecture I. Productive EfficiencyII. Allocative EfficiencyIII. Market FailureIV. Marginal CostV. Marginal BenefitVI. Consumer SurplusVII. Producer SurplusVIII. Public GoodIX. Private GoodCurrent LectureProductive Efficiency- Making best use of the resources, lowest cost productionAllocative Efficiency - Most desirable (right quantity) mix of outputMarket Failure- The efficiency of production from a country that doesn’t bring the correct amount to satisfy people’s needs- Occurs when either the demand curve fails to reach the amount of products demanded or the supply curve fails to include all of the costs of productionMarginal Cost- The cost of producing an additional unit (one more)- Supply curve is a marginal cost- The demand curve is the willingness to pay for an additional goodMarginal Benefit- Measure of the value of a good or service in the market- The willingness of consumers to buy what has already been produced These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Consumer surplus- The value you receive that you didn’t have to pay for- Willingness to pay – actual price (subtracting)o Ex. $10 - $7 = $3Producer Surplus- Minimum acceptable price (must be as large as marginal cost)- The amount of value a producer receives beyond the minimum they are willing to receive - Price – minimum acceptable price (subtracting)Public Good- Non excludability – non payers cannot be excluded from consuming (free riders)- Non rivalry – does not get used up in consumptionPrivate Good- Non payers can be