ECON 1050 Lecture : Efficiency and Equity
3 Feb 2012
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Document Summary
Efficient market hypothesis: individuals make choices in their own self-interest. Markets coordinate individuals" choices in the hopes that they will benefit society. Belief that stocks will always trade at their fair value on the stock market (ie. the economy will self-regulate) Great depression occurred for similar reasons: franklin roosevelt put regulation methods in place to prevent it from, 30 years later we tried to get rid of those regulations led to 2008 crash happening again. Works well in organizations with clear lines of authority but poorly in an entire: example: czech hockey players came to canada and sold crystal to. Canadians cheaply, then went and bought levi"s, nylons, etc. that they could not get under the command economy in the czech republic; in a command economy, individuals" wants are unheeded: majority rule. Page 2 resources allocated in the way that the majority of voters choose.
