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Unformatted text preview: 1 1 Demand, Supply and the Meaning of (Economic) Life Ā” What did Adam Smith Know? Ā” It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Ā” Self-interest, competition, markets, S&D, Micro Ā” Friedmanās pencil 2 In the News 3 Adam Smith's āInvisible Handā? Ā¢ Self-interest and competition in market system leads to āoptimalā outcome Ā” Why not abuse by business? Ā” Why do consumers āget what they wantā? Ā” Why produce efficiently? Ā” Why work hard? Ā¢ Efficiency versus Equity Ā” Market economies - Capitalist Ā” Non-market economies ā Som, Communism Ā¢ Central planning ā information and incentive problems Ā¢ Role of Govāt? ā Laisser faire Ā” But : market failure, externalities, public goods 2 4 What Determines the Price of Anything? The Value? Anything?...
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This note was uploaded on 03/24/2011 for the course ECON 103 taught by Professor Lin during the Summer '08 term at Rutgers.
- Summer '08