Textbook Notes (368,098)
United States (205,941)
Boston College (1,174)
Economics (309)
ECON 1131 (91)
All (19)
Chapter 4

Chapter 4 Full Notes

2 Pages
Unlock Document

ECON 1131
All Professors

Chapter 4: Markets, Prices, and the U.S. Economy  Two main themes in economic analysis are the economic problem and the exchange of goods and services and factors of production Markets  Market exchanges occur in a variety of institutional settings, and markets have distinctive product and geographic dimensions that vary considerably from market to market Market Boundaries  The boundaries between individual products and factors of production are not often clear-cut from either the buyer’s or the supplier’s perspectives  Economists first attempt to distinguish individual products from the buyers’ perspective o Do buyers view the product as reasonably distinct? Are close substitutes available?  Industry: the collection of all firms producing the same product  Market researchers use a geographic definition of a market because they are primarily interested in the sales potential of a particular geographic area  Economists define a market in terms of an individual product or factor of production because they are primarily interested in the exchanges of particular products and factors between buyers and sellers Characteristics of Modern Market Economies  Analyzing the behavior of prices is a central focus of economies because markets function by means of prices  Main interest in price: how they process economic information and coordinate economic decisions o Fundamental economic question about market exchange: How do prices coordinate market exchanges and thereby allocate society’s scarce resources?  Individuals and business firms enter into market exchanges with completely different economic problems- different obj., different constraints, different alternatives  Only thing shared is price  Markets and prices are tied so closely together that a market economy is sometimes referred to interchangeable as a price system  3 characteristics of modern market economy that places a special burden on prices: o Production is highly specialized o Market exchanges do not occur in isolation o Sheer size and diversity of a developed market economy Specialization  As economies develop, people become generalists in consumption and specialists in production  Division of labor: once an economy begins to gro
More Less

Related notes for ECON 1131

Log In


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.