ECON 003 Lecture Notes - Lecture 2: Opportunity Cost
Document Summary
Chapter 2: some tools of the economist: voluntary vs. coerced, coercion: someone will devote resources to make you worse off if you don"t comply. Trade creates value: because the value of goods is subjective, voluntary trade creates value. How trade leads to economic progress: gains from specialization and division of labor, adam smith wrote wealth of nation , gains from mass production methods, gains from innovation. Creation of wealth: the process by which some people become rich will make everybody richer as long as it happens through voluntary exchange. Transaction costs: transaction costs: the time, effort, and other resources needed to search out and complete an exchange, middleman: a person who buys and sells goods or services or arranges trades, a middleman reduces transaction costs. Private property rights involve: the right to exclusive use of the property, legal protection against invasion from other individuals, the right to sell, transfer, exchange, or mortgage the property.
