ECN 104 Chapter Notes - Chapter 2: Mixed Economy, Planned Economy, Limited Government
12 Mar 2018
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Transactions that benefit you as well as them: property rights facilitate exchange. People have to be legitimate in order to sell their goods: encourages people to produce goods rather than protect goods they have already produced, freedom of enterprise and choice: Tr>tc: continuing economic loss = total revenue (tr) less than total cost (tc). Created by adam smith in the wealth of nations. Firms act in their own self interest, which benefits consumers because they pay for goods they want at the price they want. There was also no motive to inspire and innovate in system that was so closely monitored and regulated. In central planned economies, the government had to control all resources and get goals based on those resources. If one resource failed the whole plan would go down. The employees of the firm get paid regardless of the profitability of the firm: dealing with losses: if a firm loses money.
