ECN 222, 3rd and 4th Day of Class
ECN 222, 3rd and 4th Day of Class ECN 222 - 001
Popular in Principles of Economics-Macro
Popular in Economcs
This 5 page Class Notes was uploaded by Jennifer Su on Thursday October 1, 2015. The Class Notes belongs to ECN 222 - 001 at University of North Carolina - Wilmington taught by Adam Talbot Jones in Summer 2015. Since its upload, it has received 183 views. For similar materials see Principles of Economics-Macro in Economcs at University of North Carolina - Wilmington.
Reviews for ECN 222, 3rd and 4th Day of Class
These are great! I definitely recommend anyone to follow this notetaker
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 10/01/15
3 D 339 OF MECI QECQI TOmICS 827 ALPIE ASSIGl lmEl lT DUE NEXT Tl ILJI SDEEJ llt REVIEW Principle 1 People Face Tradeoffs eg efficiency vs equality Principle 2 Cost of something may include more than just price eg opportunity costs Principle 3 Rational People think that the margin eg people ignore sunk costs because they are costs that already have incurred NEW STU FF Principle 4 People respond to Incentive something that induces people to react due to reward punishment Positive negative incentive in uences behavior For example Increased gas prices leads to More hybrids sold More trucks for sale Think of how you could reduce the number of car crashes increased gas prices increased car prices increased tolls Principle 5 Trade makes everyone better off Allows Deonle to Specialize in one good and exchange the good for other goods Makes quality of goods higher and more accessible better prices abroad for domestically produced goods Watch this video Milton Freeman quotPencilquot Magic of the Market System The US has high skill capital intensive goods Trade allows us to buy goods more cheaply from abroad than could be produced at home Principle 6 Markets are usually a good way to organize economic activity Market a group of sellers and buyers quotOrganize economic activity means determining WHAT goods to produce HOW to produce them HOW MUCH of each to produce WHO gets them Market economy allocates resources through the decentralized decisions of many households and firms as they interact in markets A market economy acts as if led by by an quotinvisible handquotwhich promotes general economic wellbeing Principle 7 Governments can sometimes improve market outcomes Important role for governments is to ENFORCE PROPERTY RIGHTS with police and courts Pronertv Rights ability of an individual to own and exercise control over scarce resources People are less likely to own produce invest and purchase if large risk of property being stolen 4TI I Day OF MaCl OECOI WOmICS 91 Principle 7 continued Gov ts may intervene in markets to improve efficiency promote equality Governments can improve efficiency when there is Market Failure when markets fail to allocate society s resources efficiently causes include price system not working properly externalities when the production or consumption of goods affects bystanders eg pollution The gov ts role in externalities is to try and price in the externality gt Gov t should tax producers of negative externality the cost of externality eg how much is it worth to residents downstream to have clean water gtGov t should subsidize producers of positive externalities eg tax credits for refurbishing run down neighborhoods Market Power a single buyer seller has substantial in uence on market price eg a monopoly In such cases public policy may promote efficiency gtGov t may wish to alter market outcome to promote efficiency If the markets distribution of economic wellbeing is not quotdesirablequot tax or welfare policies can change how the pie is divided Efficiency vs equality is applicable here Principle 8 A country s standard of living depends on its ability to produce goods and services Huge variation in living standards across countries and over time Average income in rich countries is 10X avg income in poor countries US standard today 8X more than 100 years ago The most important determinant of living standards is productivity productivity the amount ofgoods and services produced per unit oflabor productivity depends on the equipments and skills available to laborers
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'