ECON101 Lecture 6: Week 3 / Jan 25

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Gordon Lee

Document Summary

Week 3 / jan. 25 and jan. 27, 2017. Why should the govt get involved: supply and demand w/govt, regulations on prices, quotas, elasticity. Economic forces ration commodities and services through changing prices. The market works like an invisible hand guiding economic forces to coordinate individual action and allocate scarce resources. All individual acting only on self interests are guided by the invisible hand of the market to produce allcoations that are best for society. Why is it that when we look at the real world, we don"t see these economic forces working as smoothly as the above discussion would suggest: information probs. Consumers & producers do not possess perfect info (thus consumers make mistakes all the time, esp since we dont posses perfect info: there are other forces operating in society, besides economic in uences. These forces prevent some markets from clearing and prevent other markets from operating. Social and historical forces - the invisible handshake.