ECON 1B03 Lecture : Economics Mid.docx

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Hannah Holmes

Document Summary

All production and distribution decisions are made by a central authority like a government: eg. Traditional economy: economic decisions are based on customs, beliefs, religion, habits, term is often used to refer to underdeveloped economies that rely heavily on agriculture for domestic consumption (subsistence economy. Mixed economies: combination of market and comand economies, canada is a mixed economy, mostly free market. We assume that when people are making decisions, they are acting rationally. Economic rationality: decisions making that maximizes the benefit you receive from your decsion. Perfect information: everyone knows everything about everything: eg. Firms knows our price, best technology to use, how others will react if they change price. Asymmetrical information: in practice, its difficult to get perfect information. Someone has more info on something than someone else. This makes it harder to make the best decisions. Resource: is anything that can be used to make something else. We also call resources factors of production.