self-interest entrepreneurs try to maximize profit or minimize loss. property owners try to get...
Post on 02-Jan-2016
213 Views
Preview:
TRANSCRIPT
Self-interest Entrepreneurs try to maximize profit or minimize
loss. Property owners try to get the highest price for
the sale or rent of their resources. Workers try to maximize their utility (satisfaction)
by finding jobs that offer the best combination of wages, hours, fringe benefits, and working conditions.
Consumers try to obtain the products they want at the lowest possible price and apportion their expenditures to maximize their utility.
© 2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 1
Competition Independently acting sellers and buyers
operating in a particular product or factor market
Freedom of sellers and buyers to enter or leave markets, on the basis of their economic self-interest
© 2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 2
© 2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 3
Free
1 Hong Kong
3 Australia
6 Canada
Mostly Free
9 United States
20 Japan
31 Spain
Mostly Unfree
113 Brazil
135 China
143 Russia
Repressed
171 Iran
175 Venezuela
179 North Korea
Markets and Prices A market is an institution or mechanism
that brings buyers (“demanders”) and sellers (“suppliers”) into contact.
The coordinating mechanism of capitalism is a system of markets and prices.
© 2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 4
Technology and Capital Goods Extensive use of technologically
advanced capital goods helps market economies achieve greater efficiency in production.
©2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 5
Specialization Division of labour▪ ability differences▪ learning by doing▪ saving time switching tasks
Geographic specialization
©2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 6
Use of money FIGURE 2-1 Money Facilitates Trade When Wants Do Not
Coincide
©2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 7
Active, But Limited, Government Market failures The central government, along with the
central bank, needs to take action if a market economy is experiencing recession or inflation.
©2013 McGraw-Hill Ryerson Ltd. Chapter 2, LO2 8
top related