ECON 201 Lecture Notes - Lecture 3: Market Failure, Externality, Opportunity Cost
Document Summary
Opportunity cost - the best alternative given up as a result of a. Rational people think on the basis of margins. Policy makers must understand the power of incentive employees need. Markets are generally well suited to allocate economic resources. Governments can sometimes improve market outcomes through efficiently own and exercise control over scarce resources: enforcement of property rights - the ability of individuals to, whenever there is a, a negative externality, or b, a market failure (monopoly) 1/18/17: how does the economy as a whole work? a. A country"s standard of living depends on its ability to provide goods and services. Productivity - the quantity of goods and services per unit use of labor. Fiscal policy - the government either reduces taxes or takes action to supply labor opportunities (i. e. starting government construction jobs like replacing bridges and roads) Monetary policy - the government injects and prints too much money into the economy
