MARK20100 Lecture Notes - Lecture 1: Invisible Hand, Consumer Sovereignty
Document Summary
*profit = sales (revenue) satisfying needs and wants (raise sales) (means) Costs (expenses) efficient use of resources ( lower costs) (ends: idea: self-interested behavior tends to lead to a common good in a free market = * the invisible hand (wealth of nations by adam. Smith: *command economy (socialism) = government owns all types of production, *consumer sovereignty = when consumers in a free marketplace (capitalist economy) decide what"s produced/sold (because it is market-based on what consumers buy) You can"t really successfully sell products and gain profit that don"t satisfy customers because customers won"t buy a 2nd time even if they bought the 1st bad product. Our official poverty rate: 12-15: there is always a bottom quintile, this takes into account only cash transfers (not non-cash) Our capitalist system relies on human nature. This is the system that"s designed to work in free markets: works because it relies on a dependable force: self-interest/human nature.
