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Understanding Economic Systems and Market Dynamics

Explore the fundamental factors influencing economic systems and the economics of markets, from economic assumptions to economic ingredients and exercises in various economic systems. Delve into the basics of demand, supply, and the importance of institutions and property rights.

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Understanding Economic Systems and Market Dynamics

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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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