Distortions (economics)

Distortions (economics)

Distortions (economics) (or market imperfection) is that makes economic conditions that interfere with efficient lack of economic agents in maximizing social welfare in order to maximize their own welfare.

A condition which is used to measure the distortion is the deviation between the market price of the good and the marginal cost is the difference between the marginal rate of substitution in consumption and transformation of the marginal level of production. Such deviations may result from the monopoly, tariffs and import quotas, which in theory could cause some type of behavior is called business people passing. Source of distortion is uncorrected externalities, the tax discrimination in the price of goods or income, inflation, and complete information. Each of which can result in a net loss on the part of consumers. In ideal conditions where there is a state of perfect competition without market distortions resulting in a balance of supply and demand.