Scarcity Lec1&2

Scarcity Lec1&2 - Goods are allocated according to consumer...

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Scarcity Resources are rare Land Labor Capital Organization Resources have alternative uses Economics is the study of the best allocation of resources among alternative uses Economic choice questions: 1. WHAT? What goods to produce and in what quantities? 2. HOW? Capital intensive method. 3. FOR WHOM? Economics decision making: 1. People are rational 2. They respond to incentives LEC 2— Economic Agents: Producers Consumers Workers Entrepreneurs Investors Market economy—there is an incentive to purchase goods R War Develop new energy sources Improve health care Occur in a Market Economy Command Economy (All economic decisions are made by the gov’t)
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Voluntary Exchange (Economic Freedom) Efficiency Allocative Efficiency Productive Efficiency
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Unformatted text preview: Goods are allocated according to consumer preferences Production at lowest cost Equity—how incomes and goods are distributed; a “fair” distribution of income Economic Theory/ Economic Models Markets Competitive Non-Competitive OPEC 1. Assumptions—assume that the consumers get the best 2. Hypothesis (theory) 3. Testing the hypothesis with data 4. Accept make predictions 5. Rejected look for a new theory Economic Theory Microeconomics Macroeconomics 1 Consumer Total consumption expenditure 1 Producer Total output 1 Investor Total investment 1 Worker Total employment 1 Market Total economy Positive economics Explain events Normative economics (welfare economics) What should be done?...
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This note was uploaded on 04/25/2008 for the course ECON 003 taught by Professor Das during the Spring '08 term at UC Riverside.

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Scarcity Lec1&2 - Goods are allocated according to consumer...

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