[ECON 212] - Midterm Exam Guide - Comprehensive Notes for the exam (17 pages long!)
Document Summary
Markets are usually a good way to organize economic activity. Government officials (central planners: allo(cid:272)ate e(cid:272)o(cid:374)o(cid:373)y"s s(cid:272)ar(cid:272)e resour(cid:272)es. Who produced and consumed these goods and. Through decentralized decisions of many firms and households. As they interact in markets for goods and services. Households and firms interacting in markets: a(cid:272)t as if they are guided (cid:271)y a(cid:374) (cid:862)i(cid:374)(cid:448)isi(cid:271)le ha(cid:374)d(cid:863, leads them to desirable market outcomes. Corollary: government intervention: pre(cid:448)e(cid:374)ts the i(cid:374)(cid:448)isi(cid:271)le ha(cid:374)d"s a(cid:271)ilities, 7. Enforce rules and maintain institutions that are key to a market economy. Promotes equality, avoid disparities in economic wellbeing. Situation in which the market left on its own fails to allocate resources efficiently. I(cid:373)pa(cid:272)t of o(cid:374)e perso(cid:374)"s a(cid:272)tio(cid:374)s o(cid:374) the (cid:449)ell-being of a bystander. Ability of a single economic actor (or small group of actors) to have a substantial influence on market prices. Market economy rewards people: according to their ability to produce things that other people are willing to pay for.
