Microeconomics_Chapter_1 - Microeconomics Chapter 1 1 The...

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Microeconomics Chapter 1 1. The Invisible Hand Economy: system for coordinating societies productive activities Economics: social science that studies the production, distribution, and consumption of goods and services Market economy: an economy in which decisions about production and consumption are made by the individual consumers and producers - United States econo my - No central a uthority telling people what to produce or where to - Alternative is a com m a nd economy ( there is a central authority m aking decisions about production a nd consu mption , this is what the The term invisible hand com es from a pass age in Adam Smith’s book A wealth of Nations, it refers to the way a m arket economy m a n ag es to harness the power of self-interest for the good of society Microeconomics: the study of how individuals m ake decisions and how thes e decisions interact - One of the key ele m ents in microeconomics according to Adam Smith is : individuals pursuing their own interest often do promote the 2. My Benefit Your Cost “ Som etimes the individual pursuit of one’s own interest, inste ad of promoting the interest of society as a whole, can actually m ake society worse off” When this happens it is known as m arket failure 3. Good Times, Bad Times The economy doesn’t always run s moothly it experiences fluctuations, a series of ups and downs. Recession: downturn of the economy - During a recession millions of workers will be laid off - By middle ag e the typical American has experienced three of four
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Macroeconomics: branch of economics that is concerned with the overall ups and dow
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This note was uploaded on 09/12/2011 for the course ECO 2023 taught by Professor Underwood-caputo during the Spring '08 term at University of Central Florida.

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Microeconomics_Chapter_1 - Microeconomics Chapter 1 1 The...

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