ECON 2000 Chapter : Chapter 4 Outline

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15 Mar 2019
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Demand and supply applications: the price system: rationing and allocating resources, introduction. Econ chapter 4: 1: the market system also called the price system performs two important and closely related functions. First, it provides an automatic mechanism for distributing scarce goods and services. It simply means that you are the highest bidder. Income is unfairly distributed: some items are necessities, everyone should be able to buy them at a reasonable price. Econ chapter 4: 2: attempts to bypass price rationing in the market and to use alternative rationing decides are more difficult and more costly than they would seem at first glance, oil, gasoline, and opec. Its price has fluctuated wildly, leading to major macroeconomic problems (crude oil: oil is like other commodities in that its price is determined by the basic forces of supply and demand. Every time an alternative is tried, the price system seems to sneak in the back door.

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