GOALS OF ECONOMIC SYSTEMS
Every economic entity is confronted with three basic issues
1. Â Â Â Â Â Â Â Â what to produce
2. Â Â Â Â Â Â Â Â how to produce it
3. Â Â Â Â Â Â Â Â how to assign the final output
Organization:
National economies
        Central planning
        Free Markets
Firms and Households
        Centralized decision making
        matchless authority for decision making
Pareto efficiency
A distribution of resources where there are no alternative allocations that keeps all individuals at least as sanitary off but makes even one person part off. When there is an efficient allocation of resources, all members are equal. In Pareto some are give out off.
Property Rights and Exchange in a Market Economy
Property Right: legally enforced right to take aim the uses of an economic good.
Ownership: involves use rights and alienability rights.
Gains from Trade
People buy and sell to make themselves better off. Trade is when the buyer places a higher respect on the item of the seller. Gains from trade make both parties better off. inversely advantageous. Gains form trade come form individual preferences, since large number place different values on items according to their preferences.
Comparative advantages: forte of a good.
A common misconception is that trade takes place because people substantiate too much of some goods.
Trade is an important form of value creation.
, providing important incentives to move resources to more productive uses.
BASICS OF SUPPLY AND DEMAND
MARKET expenditure SYSTEM - THE PRICE MECHANISM
Market includes all potential buyers of a certain(prenominal) product.
Competitive market: many a(prenominal) buyers and sellers and individual transactions are so small in relation to the market that the price is unaffected(p) by any single sale or purchase.
Demand wrick depicts how many people are volitioning to buy a product at each price.It slopes downward because people will buy more if products have lower prices.
Supply curve depicts how many producers are willing...
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