{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

03 Markets and Governments

03 Markets and Governments - What is capitalism ownership...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
What is capitalism? ownership system: who has authority to acquire, use, derive income from, alienate/sell property o Capitalism: private individuals have property rights o “private” v. “public” v. “publicly owned” (nationalized, state-owned) companies allocation system: Basis on which resources circulate thru eco. In capitalism, market (exchange).
Background image of page 1

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

View Full Document Right Arrow Icon
WHAT IS A MARKET? Control and coordinate separate actions of large numbers of people thru voluntary exchanges Conditions that must be satisfied: 1. For any factor of production and/or commodity/service, many buyers and sellers 2. Barriers to entry and exit low 3. All seek to maximize the return to his/her factor of production; 4. Adequate information available about alternatives.
Background image of page 2
If satisfied, prices accurately reflect aggregate supply and demand Pareto optinality: no individual can be better off without making someone else worse off. -- numerous Pareto optima possible, depending on distribution of income.
Background image of page 3

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

View Full Document Right Arrow Icon
WHY GOVERNMENTS INTERVENE 1.Provide public goods a.Joint consumption
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}