ABSTRACT
Economists recognize several commonly occurring circumstances of private choice, referred to as market failures that violate the basic assumptions of the idealized competitive economy and therefore interfere with efficiency in production or consumption. Analysis of the competitive model makes the following assumptions about the production of goods firms attempt to maximize profits by buying factor inputs to produce goods for sale. Social surplus, which measures the net benefits consumers and producers receive from participation in markets, serves as that yardstick. Productive land may be able to realize a rent at the market price, while another farmer on marginal land just covers total cost. On occasion, public decision makers or private individuals as members of society may wish to give up some economic efficiency to protect human life, make the final distribution of goods more equitable, or promote fairness in the distribution process.
