Sovereign is a king or sultan who rules a nation. The model of competition shows how firms respond quickly to change due to the profit incentive consumers and owners of resources are the gainers from competition. Why output that is greater than or less than the competitive equilibrium is inefficient. The rationing problem Who the sellers will be cannot be determined by markets and prices We consider two cases Licenses to lowest-cost sellers. Licenses distributed randomly.
Economic rent is bckm.
Deadweight loss is chk. Deadweight loss is bchkj. Why the illegal market increases efficiency. Loss equals shaded area in figure 12-7. Loss is greater than the shaded area.