05 Markets, Efficiency & Role of Government

05 Markets, Efficiency & Role of Government -...

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Markets, Efficiency & Role of Government 2/17/11 11:57 PM Articles to look at: US Poverty, Chinese yuan- government restrictions on value, not allowing it to float freely Adam Smith and the Invisible Hand The Wealth of Nations o Every individual…intends only his own gain…led by an invisible hand o By pursuing his own interest he frequently promotes that o the society more effectually than when he really intends to promote it By intending gain for yourself, in the end you also gain for community The Market’s Allocation of Resources In a market economy, the allocation of resources is decentralized o Nobody is telling us what to do Is the market’s allocation of resources desirable? o Are we making the right choices? Would a different allocation of resources make society better off? Is the market’s allocation of resources efficient and what do we mean by efficiency anyway? Welfare Economics
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This note was uploaded on 02/17/2011 for the course ECON 011 taught by Professor Yezer during the Fall '07 term at GWU.

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05 Markets, Efficiency & Role of Government -...

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