ECON 208 Chapter Notes - Chapter 1: Resource Allocation, Opportunity Cost, Barter

• School: McGill University
• Department: Economics (Arts)
• Course: ECON 208
• Professor: Sebastien Forte

Document Summary

It is the result of a large number of decentralized decisions. The market sets a price that ensures there is no excess supply or demand. Without scarcity of resources there is no limit for consumers. Flow of income and expenditure is circular. All actual economies are mixed- elements of free markets, tradition, and government intervention. Canada: has a lot of elements from a market economy, but things like health care, saqs are based on centralized decision (government has a monopoly and sets prices) The more people in an economy, the more interactions there are and the more difficult it is to centrally plan because there is so much information to organize that it becomes beyond the capacity of the central planner. Consumers make a decision about what they are going to buy, producers make decision about what they are going to produce, and this together is the market.