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Ideas key scarcity scarcity a situation in which

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Unformatted text preview: ng Key Ideas Key Scarcity Scarcity » A situation in which available resources are situation not sufficient to satisfy people’s wants and needs » A good can be scarce only if available good if quantity is small relative to needs: air is essential for life, but not scarce » A good can be scarce only if someone wants good someone to consume it: anthrax virus is relatively rare, but not scarce Key Ideas Key Scarcity Scarcity Examples: » places in ECON111 Tuesday tutorials are places scarce because Demand > # of places » parking spots at UOW campus at 9 am are parking also scarce Demand > # of places Key Ideas Key Role of Markets Role » How to allocate scarce resources among How competing demands? » Markets allocate resources by means of prices: Markets establish property rights and let people trade » Goods which are more scarce will command higher Goods prices » Key result: market mechanism in most cases is the Key most efficient way to allocate resources (Ch.7) to Key Ideas Key Role of Markets Role » How are (scarce) places in ECON111 tutorials How allocated? » Is this a good way to do this? Is Hypothetical Example: » A, who is currently in Monday tutorial might be A, willing to pay $10 to get a place on Tuesday to » B is willing to sell his place in Tuesday tutorial for is $5 (and switch to Monday) (and Key Ideas Key Role of Markets Role » If A pays B, say, $7 to switch both will be better If off: A is bett...
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