Econ1-Fall2010-08A-InvisHand-handout - Readings Economics1

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Economics 1 rinciples of Microeconomics Principles of Microeconomics 8. The Invisible Hand in Action (A) Fall 2010 Herb Newhouse 1 eadings Readings h. : The Invisible Hand in Action . 03 Ch. 7: The Invisible Hand in Action (p. 203 214) The Central Role of Economic Profit The Invisible Hand Theory Response to Profits and Losses The Importance of Free Entry and Exit We’re completely skipping Economic Rent versus Economic Profit (p. 215 – 216). 2 utline Outline troduction to the Invisible Hand Introduction to the Invisible Hand. Costs and Profits. Entry and Exit. 3 he Invisible Hand The Invisible Hand Provided the assumptions for a perfectly p py competitive market are satisfied, when individuals try to maximize their own welfare the arket outcome will be efficient market outcome will be efficient. Adam Smith, The Wealth of Nations : It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard of their own interest. We address
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This note was uploaded on 06/12/2011 for the course CS 1 taught by Professor Staff during the Fall '08 term at Cornell University (Engineering School).

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Econ1-Fall2010-08A-InvisHand-handout - Readings Economics1

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