ECON1-0406

ECON1-0406 - Adam Smith Wealth of Nations 1776 - Discusses...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Adam Smith Wealth of Nations 1776 - Discusses what the world was like in those days - Individuals promote only their own interests, but in doing so they promote the public interest - Greed is good - What is this invisible hand? (some mechanism that causes the selfishness to bring about something good) - Market competition - When people pursue their selfish good causes competition, and will discipline people What we’ll do today - Define a “good” outcome from trade - Show that competitive equilibrium achieves that outcome Outcome - Trades produce outcomes - Some buyers get apples, some don’t - Some sellers sell apples, some don’t - Buyers and sellers make profits Profits - profits measure benefit of exchange - More profit means higher total benefit - Profits are a good thing Supplier’s Profit - Supplier’s reservation price is lowest at which willing to sell - In experiment, supplier’s reservation price = seller cost Demander’s profit - Demander’s reservation price is highest at which willing to buy
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/03/2009 for the course ECON ECON 1 taught by Professor Crouch during the Spring '09 term at UCSB.

Page1 / 2

ECON1-0406 - Adam Smith Wealth of Nations 1776 - Discusses...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online