ECON102-Lecture%206%20-%20Institutions

ECON102-Lecture%206%20-%20Institutions - Information on...

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Information on midterm Monday, June 22, 2:30-4:20, our lecture’s  room No tutorials on the midterm week 1
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Information on midterm Material from Lectures 2, 3, 4, 5, 6 covered: Economic principles (++) Economic systems (++) Market and government failures (++) Social welfare (+) Institutions (+) 2
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Information on midterm The exam’s format: ½ multiple choice (20 questions/ 2.5  marks each) ½ short-answer questions (5 questions/ 10  marks each) The practice midterm will be posted on  WebCT by June 16 th .  The answers to the  practice midterm will be posted by June  20 th . 3
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Institutions Lecture 6 4
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Recap Looked at the economic principles; under  market or command economy bring  different consequences to how the  economic life of a society is organized Command vs. market economy : “Why is  there no black caviar in the Soviet  groceries? – Because no one asks for it.” Command vs. market economy : “What  will happen if the Communist Party of the  Soviet Union takes over the Sahara  5
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Recap Disadvantages and failures of both types of  economic system do not make it easy for a  mixed economy  to function and positively affect  social welfare 6
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Today The central puzzle of the world economy:   How have societies diverged? What accounts for their widely disparate  performance characteristics? We all descended from primitive hunting  and gathering bands and have evolved  into radically different religious, ethnic,  cultural, political, and economic societies The gap between rich and poor nations is  wider today than ever before 7
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Today  On a smaller scale , notice that we  defined markets as groups of buyers and  sellers who exchange things and money  for mutual benefit What is missing in this picture is some  account of  the environment, or a  framework, in which these exchanges take  place  ->  they do not happen in vacuum 8
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Today  When we talked about a command  economy, we did mention the central  planning structure, so we gave some  minimal description of the framework in  which the economic activity takes place Clearly, in a market economy there is no  central planning, so how do the exchanges  take place?   A simple observation  shows that markets depend for their  own existence on non-market social  9
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Another observation: if markets are so  great, why are there inefficient forms of  exchange that persist for millennia?  Why  did societies not switched from inefficient  social arrangements to efficient ones? 10
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This note was uploaded on 06/22/2009 for the course DEPARTMENT ECON102 taught by Professor Veralantinova during the Summer '09 term at Simon Fraser.

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ECON102-Lecture%206%20-%20Institutions - Information on...

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