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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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