ECON-2110 Lecture Notes - Lecture 2: Trophy Hunting, Resource Allocation
Document Summary
Living in a village: lions eat cattle & they eat you!! (costs) People are moving to greenville (more houses) & people are moving from detroit (less) There is no central figure of control (central planner = very hard) A large number of parties react independently and in a decentralized fashion to information communicated through market prices. **** the incentives created by rising and falling prices ensure that resources are used where they are most valuable. Microeconomics provides a model of resource allocation through markets. Markets can be monetary or non-monetary but there are always willing buyers and. There are markets for: apples, human kidneys, spouses, political influence sellers (price and exchange) Scarcity: you must give something up to get more of something else. **not concerned with money, but what the money represents** Because of scarcity, we are constantly facing choices. The economic model is based off of several principles: life consists of trade-offs.
