Economics 1021A/B Study Guide - Quiz Guide: Multinational Corporation

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: bruce hammond

Document Summary

Institutions the humanly devised constraints that shape human interaction. Constraints: what individuals are prohibited from doing, and under what conditions some. Institutions differ in different countries individuals are permitted to undertake certain activities. Formal constraints: rules that human beings devise. Informal constraints: convention and codes of behaviour. Goal: reduce uncertainty by establishing a stable structure to human interaction. Institutional change: formal constraints may change very quickly, but informal constraints barely change. Organizations provide structure to human interaction, and include political, economic, social, and educational bodies. They are groups of individuals bound by some common purpose to achieve objectives. Neoclassical view economic is the science of choice, choices are made by individuals, who are assumed to be selfish and want to maximize their own welfare. Individual freedom; individuals can get what they want, as long as they pay the right price: there is no higher authority to tell individuals what they should want and produce.