RE 165 Session 2
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Transcript of RE 165 Session 2
Fundamental factors behind the workings of economic systemsand the economics of markets
RE 165 SESSION 2
Economic AssumptionsSelf-Interest Seeking BehaviorRisk Averse BehaviorRational BehaviorBehavior of a person who is free to choose
versus one who does not understand freedom or restricted freedom
Economic IngredientsEconomic Man (Human Resources)
KnowledgeSkillsAbilitiesHybrid: Creativity & Reason (Technology)
ResourcesLandEnergyCapital
Exercises in Economic SystemsAgricultural EconomiesEmpiresFeudalismMercantilismColonialismIndustrialismCapitalism/SocialismIntegrated Socialism: Globalization
FundamentalsFreedom of choice (individualism)Protecting against market failure
(justice/equity)Protecting against the excesses of
protecting against market failure.Risk-sharing and productivity (laissez
faire)Reason and knowledge (controlling
government before it controls us)
DemandForces
Size of marketELASTICITY: Intensity of desire for
product/service (need or want)Ability to pay for product/servicePrices of substitutes and complementsInstitutions and property rights
SupplyForces
Number of competitorsTechnology and resourcesProductivity in the use of resourcesSavvy in production, marketing distribution,
and sale of product/services …