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) 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 …