ECON 103 Lecture Notes - Lecture 2: Efficient Frontier

• School: UMASS-Amherst
• Department: Economics
• Course: ECON 103
• Professor: Gerald Friedman

Document Summary

The world does not actually function in an orthodox economic system where production is for consumption. It produces for profit, and this is the way that capitalism works. Capitalist takes money buys your labor/time produces commodity capitalist sells commodity. M - c - c" - m" if m" > m = profit makes economics a social science. If the capitalist makes profit, the profit goes right back in to buy more labor. There is no regard for the use of production. Institutions constrain individuals, as they become born into a world full of rigid rules. institution - established ways of understanding and acting; facilitate division of labor. Structure social life: physical manifestation - i. e. - buildings, norms + rules - i. e. - grammar, laws, etc. We act through institutions; it"s difficult to act against them as they make it possible to reap gains from cooperation.