ECON 110 Chapter 16: Chapter 16 Notes

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

Document Summary

Monopoly of violence: violent acts committed by the government for social stability (can be abused. When the government"s monopoly of violence is secure and functions with effective restrictions against its arbitrary use, citizens can safely carry out their ordinary economic and social activities . Two different approaches for case of free markets. Formal defence : based on the concept of allocative efficiency, p=mc (for producers) if in perfectly competitive market, therefore. Informal defence : based off 3 central arguments i. ii. iii. Free markets provide automatic coordination of the actions of decentralized decision makers. The pursuit of profits in free markets provides a stimulus to innovation and rising material living standards. Free markets permit a decentralization of economic power. Core characteristics of free market: automatic coordination, allow for coordination without anyone needing to understand how the whole system works b.