ECON 208 Chapter Notes - Chapter 1: Resource Allocation, Externality, Transact

• School: McGill University
• Department: Economics (Arts)
• Course: ECON 208
• Professor: Mayssun El- Attar Vilalta

Document Summary

Raw materials, parts, tools, perishables, manufactured goods. Economy is a system in which scarce resources (labour, land, machines) are allocated among. An economy based on free-market transaction is self-organizing, meaning when individual consumers and producers act independently to pursue their own self-interests, responding to prices determined in open markets, the collective outcome is coordinated (spontaneous economic order) Self-interest, not benevolence, is the foundation of economic order. Efficiency means that the resources available to the nation are organized so as to produce all the goods and services that people want to purchase and to produce them with the least possible amount of resources. Relatively efficient order that emerges spontaneously out of the many independent decisions made by those who produce, sell, and buy goods and services. These decision makers all respond to the same set of prices, which are determined in markets that respond to overall conditions of national scarcity or plenty.