ECON 110 Lecture Notes - Lecture 3: Autarky, Scientific Method, Linear Combination

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

The complexity of the modern economy: most modern economies are mixed based economies. Incredibly complex, lots of things to keep track of: works through institution of markets, allows willing buyers and sellers to get together, prices in these markets reflect relative scarcity. Characteristics of market economies: self interest, perceived what is best for us", consumers decide what to consume, producers decide what to produce. Incentives: prices guide decision making, market prices and quantities, outcomes. Institutions: markets themselves, legal system/ property rights. No one can force you to buy/sell something, it"s your own decision: banking system, etc. Circular flow of income and expenditure: shows how the economic agents are linked, households, owners of factors of production" (resources, sellers in factor markets", buyers in product markets", firms, owned by households. Hetesh seth: buyers in factor markets", sellers in product markets". Microeconomics looks at specific individuals/markets within the flow. Macroeconomics looks at the size of the flow and how we can affect it.