POL-2.C—a. Explain equilibrium allocations in imperfect markets relative to efficient allocations (using graphs where appropriate) and why…

a. Explain equilibrium allocations in imperfect markets relative to efficient allocations (using graphs where appropriate) and why these markets are inefficient. b. Calculate (using graphs where appropriate) the deadweight loss resulting from the production of a non-efficient quantity.

• Equilibrium allocations can deviate from efficient allocations due to situations such as monopoly; oligopoly; monopolistic competition; negative and positive externalities in production or consumption; asymmetric information; and insufficient production of public goods.
• Producing any non-efficient quantity results in deadweight loss.
• Enduring understanding POL-2: Perfectly competitive markets allocate resources efficiently, but imperfect competition often results in market inefficiencies.