Textbook Notes (363,381)
Canada (158,358)
Economics (727)
ECON 1B03 (302)
Chapter 1

Econ 1B03 -Chapter 1 Part 2 .docx

2 Pages
Unlock Document

McMaster University
Hannah Holmes

Richard Damra Thursday, January 10, 2013 Econ 1B03 Gains from Trade  In a market economy, people engage in trade with each other  Not every family or nation can produce everything it needs effificently  We specialize in tasks we do best and trade with others for the things we need that they can provide. (division of labour)  In this way, we have gains from trade Efficiency  Efficiency: we make the best use of our resources (economic decisions)  Equity: Fair distribution of resources (political decisions)  Market failure: Occurs when the market fails to allocate resources efficiently. Government may intervene  Externality: Impact on someone random. (ex: Guy buying tree and their neighbor gets shade). Impact of one person or firm’s actions on the well-being of a bystander  Market power: ability of a single firm to unduly influence market prices eg. Monopoly.  Some goods just aren’t suited for the market. Eg donor organs The Economist’s Roles  When economists are trying to explain the world, they are scientists  When economists are trying to change the world, they are policy advisors. Positive vs Normative Statements  Positive statements: describe the world the way it i
More Less

Related notes for ECON 1B03

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.