Chapter 1

Chapter 1 - Chapter 1 (2/11/08) Principle #5: Trade can...

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Chapter 1 (2/11/08) Principle #5: Trade can make everyone better off. - Rather than being self-sufficient, people can specialize in producing one good or service and exchange it for other goods. . - Countries also benefit from trade and specialization Get a better price abroad for goods they produce Buy other goods more cheaply from abroad than could be produced at home. Principle #6: Markets are usually a good way to organize economic activity - Market: A group of buyers and sellers (need not be in a single location) - “Organize economic activity” means determining What goods to produce How to produce them How much of each to produce Who gets them - In a market economy, these decisions result from the interactions of many households and firms. Principle #7: Governments can sometimes improve Market outcomes - Important role for government: Enforce property rights (with police, courts) - Market failure: Not allocating resources properly. -
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This note was uploaded on 04/17/2008 for the course ECO 201 taught by Professor Zenker during the Spring '08 term at Elon.

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Chapter 1 - Chapter 1 (2/11/08) Principle #5: Trade can...

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