[ECON 110] - Final Exam Guide - Comprehensive Notes for the exam (97 pages long!)

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

The operative choice is not between an unhampered free-market economy and a fully centralized command economy. It is rather the choice of which mix of markets and government intervention best suits peoples hopes and needs. When the governments monopoly of violence is secure and functions with effective restrictions against its arbitrary use, citizens can sagely carry out their ordinary economic social activities. Argue they"re more exible and adjust quickly to changes ex. price of oil rises some households may cut down on house temperature some may cut down on driving some may give up on air conditioning. Economy grows from new products and processes creating pro ts. They attempt to allocate resources to successful innovations. Sometimes works in monopolized or imperfect markets through creative destruction. Since trade is voluntary, power is constricted. Market failure describes a situation in which the free market, in the absence of government intervention, fails to achieve allocative ef ciency.