TAILIEUCHUNG - Lecture Basic microeconomics - Chapter 2: The economic organization of society

After reading this chapter, you should be able to: Define a market economy and explain how it relies on markets to coordinate economic activities, define a command economy and explain how in practice it solves the three coordination problems, demonstrate opportunity cost with a production possibility curve and state the principle of increasing marginal opportunity cost,. | The Economic Organization Of Society Chapter 2 Laugher Curve In capitalism man exploits man; in socialism it’s the other way ‘round. Abba Lerner Introduction An economic system must coordinate individuals' wants and desires. Introduction An economic system has to solve three coordination problems: What, and how much, to produce. How to produce it. For whom to produce it. Introduction Every economy faces the problem of how to make individuals do what society wants them to do. Introduction Sometimes the goals of society and individuals conflict. An example is the NIMBY (Not In My Back Yard) phenomenon. NIMBY is a mindset in which individuals approve of a project so long as it is placed somewhere else. Introduction An economic system must provide the incentives to do those things that alleviate scarcity—produce more and consume less. Introduction The two main economic systems of the past 50 years, capitalism and socialism, answer these immense coordination problems differently. Capitalism Capitalism is an economic system based upon private property and the market in which, in principle, individuals decide how, what, and for whom to produce. Under Capitalism: Individuals are encouraged to follow their own self-interest, while market forces of supply and demand are relied upon to coordinate those individual pursuits. Under Capitalism: Distribution of goods is to each according to his or her ability, effort, or inherited property. Under Capitalism: Government must allocate and defend private property rights. Private property rights – the control a private individual or firm has over an asset or a right. Reliance on the Market Markets work through a system of rewards and payments. In capitalism individuals are encouraged to follow their own self-interest. Reliance on the Market Prices coordinate individuals' wants. If there is not enough of something, its price goes up. If there is too much, price goes down. What’s Good About the Market? Most economists believe the market

• Kinh tế học
• Basic microeconomics
• Kinh tế vi mô
• Lecture Basic microeconomics
• International economic policy
• Market structure
• Economic organization of society
• Economic reasoning
• Language of graphs
• Economic systems
• Canadian economy
• Law of demand
• Demand changes
• Supply changes
• Price elasticity
• Government intervention
• Logic of individual choice
• Indifference curves
• Cost analysis
• Isoquant analysis
• Perfect competition
• Monopolist’s price
• textbook
• college
• open
• microeconomics
• basic
• R
• Larry Reynolds PhD
• Lecture Microeconomics
• Economic problem
• Basic macroeconomic relationships
• Economic policies
• Macroeconomic relationship
• Investment demand curve
• The central concepts
• The modern mixed economy
• Basic elements
• Consumer behavior
• Business organization
• Perfectly competitive markets