How Economics Works

How Economics Works - Interaction: How Economies Work...

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Unformatted text preview: Interaction: How Economies Work Interaction of choicesmy choices affect your choices, and vice versais a feature of most economic situations. The result of this interaction are often quite different from what the individuals intend. There Are Gains from Trade Trade- providing goods and services to others and receiving goods and services in return Gains from trade- people can get more of what they want through trade than they could if they tried to be self-sufficient Specialization- each person specializes in the task that he or she is good at performing The economy, as a whole, can produce more when each person specializes in a task and trades with others Markets Move Toward Equilibrium Equilibrium- when no individual would be better off doing something different Markets usually reach equilibrium via changes in prices, which rise or fall until no...
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This note was uploaded on 03/16/2012 for the course ECON 101 taught by Professor Hansen during the Fall '07 term at Wisconsin.

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