03 Markets and Governments

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

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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).
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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.
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supply and demand Pareto optinality: no individual can be better off without making someone else worse off. -- numerous Pareto optima possible,
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This note was uploaded on 04/18/2011 for the course POLI 126AA taught by Professor Ellencomisso during the Spring '11 term at UCSD.

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

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