What are the elements of the CircularFlow Diagram? What concepts
Recall, the allocation of resources refers to:
o how much of each good is produced
o which producers produce it
o which consumers consume it
o drives a wedge between the price buyers pay and the price sellers
o raises the price buyers pay and lowers the price sellers receive.
o reduces the quantity bought & sold
We consume many goods without paying: parks, national defense, clean
air & water.
When goods have no prices, the market forces that normally allocate
resources are absent.
The private market may fail to provide t
One of the principles from Chapter 1:
Markets are usually a good way to organize economy activity.
In absence of market failures, the competitive market outcome is efficient,
maximizes total surplus.
One type of market failure:
Trade can make everyone
What are price ceilings and price floors? What are some examples of
How do price ceilings and price floors affect market outcomes?
How do taxes affect market outcom
You design websites for local businesses. You charge $200 per website,
and currently sell 12 websites per month.
Your costs are rising (including the opportunity cost of your tim