ECN 204 Lecture Notes - Lecture 7: Safelite, Economic Planning
11 May 2016
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Document Summary
Failure arises b/c of: basic human condition of scarcity, human search for greater rewards. Lack of information, particularly in the market system. Choices have to be made, some of which that won"t work out. Some producers won"t be able to get the necessary resources they need. Others, already in production will fail to retain the resources they do have. Choices and the necessity of allocation make failure unavoidable. But failure causes: a release of resources that can be re-employed (possibly at lower prices) in more successful undertakings, decrease of abundant gs produced that can then be sold a higher prices (when supply falls) As some businesses fail, others will start and grow. Even efficient firms should fold if more efficient firms exist. No such thing as good absolute performance. A beautiful female can fail to attract a particular make if an even more beautiful female competes. Information is costly both in the product and resource (land, labour and capital) market.
