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RE 165 Session 2

RE 165 Session 2. Fundamental factors behind the workings of economic systems and the economics of markets. Economic Assumptions. Self-Interest Seeking Behavior Risk Averse Behavior Rational Behavior

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RE 165 Session 2

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  1. RE 165 Session 2 Fundamental factors behind the workings of economic systems and the economics of markets

  2. Economic Assumptions • Self-Interest Seeking Behavior • Risk Averse Behavior • Rational Behavior • Behavior of a person who is free to choose versus one who does not understand freedom or restricted freedom

  3. Economic Ingredients • Economic Man (Human Resources) • Knowledge • Skills • Abilities • Hybrid: Creativity & Reason (Technology) • Resources • Land • Energy • Capital

  4. Exercises in Economic Systems • Agricultural Economies • Empires • Feudalism • Mercantilism • Colonialism • Industrialism • Capitalism/Socialism • Integrated Socialism: Globalization

  5. Fundamentals • Freedom 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)

  6. Demand • Forces • Size of market • ELASTICITY: Intensity of desire for product/service (need or want) • Ability to pay for product/service • Prices of substitutes and complements • Institutions and property rights

  7. Supply • Forces • Number of competitors • Technology and resources • Productivity in the use of resources • Savvy in production, marketing distribution, and sale of product/services …

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