October 3 econ lecture

October 3 econ lecture - October 3, 2010 Econ 101...

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October 3, 2010 Econ 101 Government can create institutions that allow markets to function Organic Produce o California certified organic farmers (1973) o Organic foods production act (1990) o National organic program (2002) o USDA organic seal private organizations also play a roll o consumer reports o underwriters laboratories o government has special power laws, fines, subpoena individual buyers and sellers are too small to affect the market no barriers to entry into the market the products in the market are homogenous: every one is exactly alike information: everybody knows everything about the product and the price products are “private goods”, privately produced and consumed with no affects on other people static models: time not explicitly modeled Asymmetric information one side has more information than the other o usually the sellers o know more about the value of the good than buyers o due to unobservable characteristics o good types and bad types
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October 3 econ lecture - October 3, 2010 Econ 101...

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