ECON 101 Lecture Notes - Lecture 1: Invisible Hand, Market Failure, Opportunity Cost
Document Summary
Economics: social science that studies the production, distribution, and consumption of goods and services. Consumers choose what to put into the sandwich. Producers choose where the bread, condiments, etc. are bought from. Focus on the interaction between consumer and producer. Market based decision: the decision is made by an individual; interactions between buyer and seller. As opposed to other countries where the government, another group, makes decisions for the individuals. Economy: a system for coordinating the productive activities of many people. Market economy: an economy in which decisions about production and consumption are made by individual producers and consumers; no coordinator. Command economy: the opposite of market economy; there is a central authority making decisions about production and consumption. Invisible hand: a way of using the power of self-interest for the benefit of an economy. Individuals pursuing their own interests often do promote the interests of society as a whole. What one does may cost someone else something.
