EC120 Lecture Notes - Lecture 1: Market Failure, Market Power, Business Cycle
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EC120 Full Course Notes
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Document Summary
Not tested on; principles of economics, circular flow model. Oct 7th midterm 1 7:30 9:00 p. m. Nov 11th midterm 2 7:30 9:00 p. m. Scarcity- the limited nature of society"s resources, cannot produce all the goods and services that people wish to have. Efficiency- society getting the most it can from its resources. Equity- distributing economic prosperity fairly among the members of society. Economics- the study of how society manages resources. Opportunity cost- what must be given up to obtain some item. Marginal changes- small incremental adjustments to a plan of action. Market economy is an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods. Property rights- the ability of an individual to own and exercise control over scarce resources. Market failure- a situation in which a market left on its own fails to allocate resources efficiently. Externality- the impact of one person"s actions on the well-being of a bystander.
