Definitions
THE ECONOMIC PROBLEM: How and Who makes the decisions. 1. What to make 2. How and Who to make it 3. Who will receive the output/income And perhaps 4. What should be a societies non-economic objectives 5. Who makes economic decisions and by what process.
SOCIAL CONTRACT: How we live together. A set of institutions formal and informal which we use in order to live together. FORMAL: police, fire dept., traffic lights. INFORMAL: drug dealers. 1066 was the most important year because the Normas invaded England at the battle of Hastings against the Angle Saxtons. This began the Social Contract.
COMMAND VS MARKET ECONOMY: Command-one person or a set of persons(experts, highly trained, the elite) who will make informed and subtle decisions, or create systems that will. And so direct the economy, that is make the economic decisions. Market- each citizen gets and equal chance to vote (?the invisible hand?) with their participation in the market (that is when they purchase goods and/or sell their services). The sum of the individual votes answer the three economic questions. There is no debate over what is valuable. We have all voted. BOOK- an economy
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