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EC 203 (9)
Lecture 2

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Economics (EC)
EC 203

Metacog question. Two things markets need to work well? Many sellers and buyers HW review Economists use price--it helps you measure how much people want something.It gives a common metric to different things so you can compare their value. Non-market values--an economic value that does not have a functioning market Use value--use forests for lumber,natural resources Non-use value--preserving forests for conservation.The is value in keeping a wildlife refuge unused.People would pay money to make sure something doesn't get used. First theorem of welfare--no need for govt interference in a private market.A well functioning market if all the conditions are met,but its rare for all the conditions to be met.If conditions are not,govt intervention is justifiable. Welfare--for both consumers and producers,focused on the well being of society Market failure--when markets don't reach maximum efficiency.When they're not using all the resources they can.When markets do not generate as much welfare as they could,because it doesn't meet some of the conditions Ways the govt gets involved with markets--creates policies,demanding permits for companies that produce too much pollution. Govt can remedy market failures by taxing stuff so people will be less inclined to buy it. Cap and trade Establish an allowable amount of emissions--a cap.Issue permits to polluters. Some will have to purchase the "right to pollute" from others Trade--allows firms to work it o
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