How is economics work with interaction of individual choices, Macroeconomics

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How is economics works with interaction of individual choices?

Principles behind the interaction of individual choices:

1. There are gains through trade.

• Specialization

• Trade and gains from trade

2. Markets shift toward equilibrium.

3. Resources must be used as efficiently as possible to attain society’s goals.

• Efficiency

• Equity

4. Markets generally lead to efficiency.

Exceptions: Market failure

5. While markets don’t attain efficiency, government intervention can enhance society’s welfare.


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