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LECTURE 9.15 ECONOMIC SYSTEM

LECTURE 9.15 ECONOMIC SYSTEM - • Producer Sovereignty o...

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Lecture 3: Economic Activity (continued) 9/15/11 Antagonism among the groups o privatizing gains/profits, socializing loss/costs i.e. big factories dumping wastes into a local lake, preventing families and children from swimming company only worry about their gains and profits while the costs of cleaning the lake come from the citizens living in the area o Consumer irrationality and antagonism with government Wanting safety when flying but unwilling to accept body scanners and/or pat-downs Wanting government to have answers to crisis but unwilling to fund it i.e. BP spill, tainted seafood, and FDA, etc. wanting everything but not willing to pay for it i.e. wanting the rights but not responsibilities Consumer Sovereignty o Market situation where consumers have the power to ultimately decide which products and services society will produce and consume o Two assumptions for Consumer Sovereignty Man is a rational being Consumers have perfect information
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Unformatted text preview: • Producer Sovereignty o Producers have the power to decide which products and services society will produce and consume • Consumer Choice o Market condition that exists when consumers are presented with options from which they can choose to buy or not • Health of the Economy o Consumer attitudes – indicators of economic confidence Consumer Confidence Index o Index of leading economic indicators – summary of components e.g. new orders for consumer G&S, new business formation, new housing starts, intentional unemployment insurance etc. o Measures of economic growth Gross Domestic Product (GDP) – total value of all goods and services produced in the US, regardless of ownership, over a period of time such as one year, measured in dollars • Real GDP o Adjusted for inflation • Per capita GDP o Per capita – per man, woman, and child • Per capita real GDP o Per man, woman, and child adjusted for inflation...
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