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three primary actors in the economy

The purpose of economics is to allocate scarce resources in a manner that maximizes society's happiness and to their highest valued use. Do you agree?

1) How do we measure society's happiness ?
2) How is the highest valued use determined ?

What are the issues and difficulties you see around trying to achieve these goals ?

Please elaborate on all questions

Solution Preview

I would agree. Remember that there are three primary actors in the economy; firms (who maximize profits), consumers (who maximize utility), and governments (who maximize social wellbeing). Economics is a tool used by governments and policy makers to maximize social wellbeing. Sometimes governments intervene because market systems fail. Markets fail for the following reasons; (1) public goods, (2) externalities, (3) market power, and (4) inequities). That said ...

Solution Summary

Three primary actors in the economy are examined.