6 Market Economy

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Text of 6 Market Economy

  • 1. The Market Economy Utility, Preferences, Profitsand Incentives

2. Entrance TicketWhat is the bestway to allocatescarce resources? 3. Coke and East Germany 4. Rich vs. Poor 5. Normal Goods vs. Inferior Goods As income As income increases,increases, consumption consumption increases.decreases. 6. Is it fair for those of us who live comfortably to impose our preferences on individuals in the developing world? 7. Why arent these men selling car insurance? 8. Utility People act to increase their utility at all times. Why is this not the same as being selfish? 9. The Power of Markets 10. Markets are amoral 11. Command Economy Communism 12. Markets are Self-Correcting 13. Prices Transmit Information How do prices transmit information? What happens when demand goes up for a product? What does that tell the producer? What happens to the prices of oranges in Ohio when a hurricane hits Florida? Why? What happens to the price of lumber and other construction equipment in Florida during an active hurricane season? 14. The Circular Flow Model 15. Every Transaction Benefits Each Party 16. The Pillars of Free Enterprise Private property Specialization Voluntary exchange The price system Market competition Entrepreneurship