ECON 105 Lecture Notes - Lecture 1: Opportunity Cost, Barter, Mixed Economy
4 Dec 2015
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ECON 105 Full Course Notes
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Reading: chapter 1. 1, 1. 2, & 1. 3 macroeconomics/ragan - 14th edition. Objectives: to view the market economy as a self-organizing entity in which order emerges from a large number of decentralized decisions. The importance of scarcity, choice, and opportunity cost, and how all three concepts are illustrated by the production possibilities boundary. About the circular flow of income and expenditure. Types of economic systems: the complexity of the modern economy. Economy is a system in which scarce resources are allocated among competing uses. If the interaction of self-interested people creates a spontaneous social order, then the economy is self-organizing. Thus, the self-interest, not benevolence, is the foundation of economic order. Loosely speaking, efficiency refers to organizing available resources to produce the output that people value most, using the ___________ possible resources to do so. Main characteristics of market economies: self-interest & incentives: individuals respond to incentives, prices and quantities: are set in (relatively) free markets in which i, institutions:
