COMM1800CHapter3 - Economics-study of how society chooses...

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Economics-study of how society chooses to employ resources to produce goods & services and distribute them among competing groups/individuals. Some people think economics is a dismal science because of the increasing world population and limited resources but Adam Smith disproves this with his theory of freedom and the invisible hand (self directed gain turns into gain for all). Four Whats of Economics- What is produced? What amount is produced? What is the method of output distribution? What is the rate of economic growth? Resource development- The study of how to increase resources and create conditions that will make better use of those resources. Circular flow of income- Households provide individual inputs (FOP) to create goods which firms sell in return for wages. These households then buy the goods using their earned money. Multiplier effect Capitalism involves free ownership of property and FOP, freedom of competition and choice, and profits. (no country is purely capitalist) Free market competition (perfect competition [many sellers producing identical products who have no influence over price; agricultural], monopolistic [large number of sellers producing similar products which can
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This note was uploaded on 02/27/2011 for the course COMM 1800 taught by Professor Kemp during the Spring '11 term at UVA.

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COMM1800CHapter3 - Economics-study of how society chooses...

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