ECN 340 Lecture Notes - Lecture 12: Probability Distribution, Economic Planning, Root Mean Square
16 Jan 2018
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[mckenzie and tullock chapter 13, online not in textbook!!] Lack of information, particularly in the market system. Choices have to be made, so of which will not work out. Some producers will not be able to get the necessary resources they need. Others, already in production, will fair to retain the resources they do have. Choices and the necessity of allocation make failure unavoidable. A release of resources that can be employed (possibly at lower prices) in more successful undertakings. A decrease of abundant goods and services produced that can then be sold at higher prices (when supply falls) As some businesses fail, others will start and grow. Even ef cient rms should fold if more ef cient rms exist. A beautiful female can fail to attract a particular male if an even more beautiful female competes (and vice versa) Information is costly both in the product and resource (land, labour, and capital) market.
