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    Tanya Roberts
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    Buyers who cannot buy have a lower buyer value than the seller's cost price, and efficiency in a market occurs when the largest total profit is achieved for all participants and no rearrangement of trades can make one person better off without hurting someone else. Adam Smith argued that individuals pursuing their own self-interest ultimately promote the overall public interest through an invisible hand of market competition. The invisible hand theorem proves that competitive equilibrium results in an efficient allocation of resources where profits are maximized and no alternative exchanges could increase total profits further.

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    Basic info about macro economics and adam smith

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    Buyers who cannot buy have a lower buyer value than the seller's cost price, and efficiency in a market occurs when the largest total profit is achieved for all participants and no rearrangement of trades can make one person better off without hurting someone else. Adam Smith argued that individuals pursuing their own self-interest ultimately promote the overall public interest through an invisible hand of market competition. The invisible hand theorem proves that competitive equilibrium results in an efficient allocation of resources where profits are maximized and no alternative exchanges could increase total profits further.

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    © All Rights Reserved
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    7 views1 page

    Macro Economics

    Uploaded by

    Tanya Roberts
    Buyers who cannot buy have a lower buyer value than the seller's cost price, and efficiency in a market occurs when the largest total profit is achieved for all participants and no rearrangement of trades can make one person better off without hurting someone else. Adam Smith argued that individuals pursuing their own self-interest ultimately promote the overall public interest through an invisible hand of market competition. The invisible hand theorem proves that competitive equilibrium results in an efficient allocation of resources where profits are maximized and no alternative exchanges could increase total profits further.

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    Monday, January 13, 2014

    Econ 1
    Lecture Januar 13, 2014

    - Buyers who cannot buy have a buyer value of less than or equal to the seller cost of
    their seller.

    - Efficiency:
    the largest profit possible for everyone in a market.
    If efficient, one cant rearrange trades to make someone better off without making
    someone else worse off.

    - Adam Smith:
    The Wealth of Nations
    Individuals promote only their own interest, but in doing so they promote the public
    interest.

    Invisible hand = Market competition


    - Is competitive Equilibrium efficient?
    The invisible hand theorem
    Proof:
    - Outcomes result from exchanges
    - Profit from any exchange = BV - SC
    - To maximize profit, you want high BV and low SC
    - Competitive equilibrium achieves this
    Cant increase profits by different traders, holding the number of traders constant or
    by adding more trades. DIFFERENT EXCHANGES DONT INCREASE PROFIT.

    Competitive Equilibrium maximizes profit every time!

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