What is efficient?
Source Karen Lord-Kuragu
Date 01/09/12/18:15

Efficiency is a relative term, even in micro-economics; and the author of the reading sought to explain efficiency. Efficient firms try to sell goods to consumers at a set price, and the greatest number of those goods are allocated to those who value them the most.
According to the author, there are two conditions a monopoly must satisfy in order to be efficient.
The first is to provide the good to anyone to whom it is worth at least its cost of production.
The second is “produce if and only if, at some quantity, consumer surplus plus profit is positive.”

There is an exception to every rule and this is why the author, speaks about a bureaucrat-god who could in some way establish an equilbrium. Since there is no such entity the limitations of a monopoly is apparent.

Hopefully the more complex ideas of the reading will be discussed in class. Please let me know if I have fulfilled the format that you were looking for.

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