6. Intro to The Island

6. Intro to The Island - The Why of Business A Simple Model...

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The “Why” of Business A Simple Model of a Complex Business
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Assumption 1: An Island Fixed Resources Land Labor Capital Fixed Technology How we make things The Recipe for production No contact with other islands.
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Assumption 2: Economic Institutions What are Institutions? Banks Hospitals Congress Universities The set or sets of rules by which certain activities occur
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Institution A: Private Property Private Property What is mine is mine and what is yours is yours I can do what I want with my stuff and receive all the benefits (and costs). The Problem is what happens when the costs and benefits aren’t mine? Common property goods The African inheritance example
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Institution B: Government Why would we assume Government: What does it provide? Protection of private property. Register and recognize property rights Enforce property rights Provide National Defense Protect our private property from those that would take it The ideas of Classical Liberalism
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This note was uploaded on 08/25/2011 for the course BUS 101 taught by Professor Rollins during the Spring '08 term at Miami University.

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6. Intro to The Island - The Why of Business A Simple Model...

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