EC 201 Lecture Notes - Lecture 1: Absolute Advantage, Price Floor, Common Land
18 Aug 2016
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Socialism: an economic system based on individual. Mercantilism: an economic system in which government determines the what, how and for whom decisions by doling out the rights to undertake certain economic decisions: mercantilism remained the dominant economic system until the 1700s (industrial revolution) Who coordinates the needs and wants of the millions of people in the us economy: no single person directs any more than a tiny part of the production of any good. Moreover, no single individual could, on their own, produce any good. Each individual acting in her own self interest on narrowly defined projects creates useful goods for consumers. At all points in the production process, individuals decide voluntarily to engage in some effort in return for wages or other remuneration. What is a price: a ratio at which two goods may be exchanged in a market, by implication, it is impossible to change only one price at a time.
