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Reading Selections:
On The Internet: Alternative and Substitute Readings
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Simple circular flow highlights two essential markets, the markets for goods and services and the resource market (the market in which businesses buy inputs). This group of readings examines two important problems centered in the resource or input markets. The first is the question of fairness, which is, along with the concept of economic efficiency, a main normative judgment used to evaluate economic systems and government policies. The readings begin by reviewing the forces that determine the amount of income people earn in a market economy. We then look at several positions about fairness and follow with a discussion of government policies that change the distribution of income. The second topic of these readings is efficiency problems caused when a scarce resource is perceived as being free. This topic expands the discussion of the problem of the commons, the prisoners' dilemma, and the free-rider problem.
After you complete this unit, you should be able to:
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