Ch 1 MICROECONOMICS - MICROECONOMICS Gateman...

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MICROECONOMICS  Gateman  Ch. 1 Economic Issues and Concepts 27/09/09 1:51 PM 23:18 1.1: THE COMPLEXITY OF THE MODERN MARKET A market economy is self-organizing “Self-interest, no benevolence, is the foundation of economic order.” - Adam Smith (1723-1790) Responds to prices determined in open markets, collective outcome is coordinated. Main characteristics of market economy: Self-interest: ppl pursue their own self-interest. Incentives: ppl respond to incentives (ex. Buyer buys  when price ) Market Price and Quantity: determine free market Institutions: all activities are governed by institutions created by government (ex. Private  propriety, freedom of contract, rule of law) 1.2: SCARCITY, CHOICE AND OPPORTUNITY COST Economics is the study of the use of scare resources to satisfy unlimited human wants. Scarcity makes it necessary to choose, implies existence of cost. Opportunity cost OC measures the cost of obtaining a unit of one product in terms of the 
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This note was uploaded on 10/19/2011 for the course ECON 101/102 taught by Professor Gateman&neary during the Spring '09 term at The University of British Columbia.

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Ch 1 MICROECONOMICS - MICROECONOMICS Gateman...

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