ECON 2013 Lecture Notes - Lecture 3: Planned Economy, Marginal Utility, Externality

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Market: a group of buyers and sellers of a good or service. This does not have to take place inside a building, can be done virtually or across countries. Modern toilet paper was first produced around 80 years ago, buyers can say whatever they want, and the seller will decide what they should make based on the available resources. Sellers will choose the how the product will be made and use the best technology to make them the most profit on their product. The only way a firm will make a profit is if the revenue is greater than the cost of making the product. Firms will often invest in better machines if they know the product they re making is in high demand. The person or group that pays the highest price will be who will receive the goods. The government can sometimes step in and choose the what, how, and who.

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