ECON101 Lecture 4: Chapter 3

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Gordon Lee

Document Summary

The players in the market essentially belong to 3 groups: household, consumers of goods and services and sellers of factors of production, sell labour, create capital, objective: to maximize satisfaction (be as happy as possible). But we don"t actually want to maximize satisfaction. For example, if a politician takes money from left-handed people and gives it to right-handed people then the rh people will probably vote for them. So we don"t know the objectives of politicians because they want to please people to be re- elected. These institutions include: individualist institutions of property and decision making, before people can even think about making an exchange they have to be clear about what belongs to who (private property rights). It may be established through: cultural norms, direct one-on-one relationships, through contracts, infrastructure for the smooth flow of goods and services, this refers to the physical infrastructure of transportation and storage, money as a medium of exchange.