[ECON 103] - Midterm Exam Guide - Ultimate 13 pages long Study Guide!

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

Document Summary

The idea of economics is to predict the future, using models. How people respond for survival or simply for self needs. Gains from trade - efficiency of market. Where markets fail - government may be needed. When markets fail, government applies law for everyone to follow in order to save the market. Giving consequences such as tax to make people follow what should be done. Conservatives often want government to enforce what they want. Liberals want government to get things done. Our general approach of addressing the roles of markets and government: It works best when buyers and sellers face accurate market signals. Market decisions are simply based on the benefit rather than the consequence it results. Ex: the meat market, if certain animal is popular, they will kill and sell rather than thinking about the consequence of extinction. Government can help markets work, by creating and enforcing property rights.