ECON 103 Lecture Notes - Lecture 2: Opportunity Cost

• School: UMASS-Amherst
• Department: Economics
• Course: ECON 103
• Professor: Russell Janis

Document Summary

General approach to addressing the roles of markets and government. Where and when do markets work well: markets work best when buyers and sellers face accurate market signals, the government can help markets work better by creating and enforcing property rights. If (cid:373)arkets fail, due to hidde(cid:374) (cid:272)osts a(cid:374)d (cid:271)e(cid:374)efits (cid:894)or (cid:858)e(cid:454)ter(cid:374)alities(cid:859)(cid:895), (cid:373)o(cid:374)opol(cid:455) power or la(cid:272)k of equity and fairness the government can play a role in correcting the markets. In modern times and understanding of economics is important for understanding various things such as the roles of markets and government in allocating resources, goods and services. Regardless of our convictions we should try and understand and respect the other side. In dire situations like floods it is often hard to decide who gets what, the question of who decides this is important in disaster relief. If the markets decide who gets what the producers of goods will inflate prices to further increase their revenue.