Capitalism
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system in which property and the means of production are privately owned
,Causes of High/Low elasticity
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-the fraction of income spent on the good
-the availability of close substitutes
-the unit of time,
How to solve the problem of Common Resources
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-introduce some sort of excludability
-government could ban any use
-government could license use or give it all to one party who will want to
consume it at the socially optimal level
How can we solve Information Asymmetrics?
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-guarantees
-warranties
-certification
-experts
-reputation
-liability laws
, Asymmetric Information
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occurs when the buyer and seller don't have the same information about
the product
Ex:
-used cars
-hope repair
-health care
Production Possibilities Frontier
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is a graph representation of the economy of possible production choices
Ex: farmer can plant either soy or corn
Inputs
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factors of production are anything which contribute to production
-capital (machines/equipment)
-labor (work/workers)
-land and natural resources
Marginal Value
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system in which property and the means of production are privately owned
,Causes of High/Low elasticity
Give this one a try later!
-the fraction of income spent on the good
-the availability of close substitutes
-the unit of time,
How to solve the problem of Common Resources
Give this one a try later!
-introduce some sort of excludability
-government could ban any use
-government could license use or give it all to one party who will want to
consume it at the socially optimal level
How can we solve Information Asymmetrics?
Give this one a try later!
-guarantees
-warranties
-certification
-experts
-reputation
-liability laws
, Asymmetric Information
Give this one a try later!
occurs when the buyer and seller don't have the same information about
the product
Ex:
-used cars
-hope repair
-health care
Production Possibilities Frontier
Give this one a try later!
is a graph representation of the economy of possible production choices
Ex: farmer can plant either soy or corn
Inputs
Give this one a try later!
factors of production are anything which contribute to production
-capital (machines/equipment)
-labor (work/workers)
-land and natural resources
Marginal Value
