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36 Cards in this Set

  • Front
  • Back
Locke on property
Human labor is source of value, Gov't is to protect
Unleash wants to expand economic growth....If we look to benefit ourselves it will eventually reduce scarcity
Opportunity Cost
value of the next best alternative (choosing a snickers bar over a milky way means that the snicker cost me a milky way)(Jewish BBall player)
Judging Economic System
1. Efficiency
2. Equity (fairness)
3. Freedom
Law of comparative advantage
Specialize in producing goods of which they are the low opportunity cost producer

1.full employment of resources
2.widest gains from trade
3.inderdependendency-NBA, flights(NIKE)
Transaction Costs
-the costs incidental to performing an exchange: legal fees, delivery charges, advertising, overhead

-Decline in transaction cost increases the area of specialization and exchange
Restrictions on Exchange
Cannot buy flamable PJs or car without belts
Law of Demand
As Price of a service rises people will buy less of that good or service
Law of Supply
As a price goes up the will supply more (celebrity gossip and pictures)
Equlibrium Price
Where supply = Demand
Role of Profits
Pizza example: switches job to supply the demand, competition
creative Deconstruction
Destroying by creating (lightbulb destroys candle makers) (car destroys horses adn carriage makers)

Price Celings
Price Floors
Price celings
Rent control: celing stops it from getting to equilibrium

creates shortages and slums
Price floors
Hitting a floor trying to get to equilibrium

Unemployment, creates surpluses
Figuring out what the market weakness is
1. what is weakness
2. what did gov't do to help
3. consequenses
Market Weakness

1.Imperfect Information
Faulty into that causes non-mutually beneficial exchanges (refund policies, warrenty etc.)

-compensation through judicial system
-provide more information(cigs)
-direct regulation (licensing)

-seems effective yet costly
-limit beneficial exchanges (limitations of licences, medical marijuana)
Market Weakness

The cost or benefit to a third party not involved in the exchange.

1. disreguard for third party effects(polution from geneva)
2.goods or services involuntary

1.Define and enforce property rights(buying air that you can polute)
2. tax, subsidize
3. Direct Regulation (standard millage for cars)

1. Effective but sometimes impossible
2. Difficult to calculate right level to tax or subsidy
Market Weakness

3.Public Goods
good that can be consumed by one without dimishing the amount available for others to consume.(lighthouse: All can use it, Television)
Weakness:free-rider problem causes public goods to be underproduced

Tax thr people and provide the good(police)

1. No market signals to indicate the efficient quantity
2. Few incentives to be efficient
One-seller (utilities)

Natural Monopoly (postal service)will ever lower prices
Inequality of material goods was accepted because:
1. result og individual merit (virtue) operating from a fair start..(extra work, extra money)

2. Those with less are satisfied with condition or prospects(moderation due to religion)

3. Creates individual incentive which equals economic growth beneficial to all
Inequality of material goods has become suspect because...
1. Economic illiteracy masks virtue-prosperity connection. Result of greed, operationing from a head

2.Economic Progress (creative Deconstruction) & recession produce extreme inequalities, take blameless victims. (materilism=frustration)

3. Economic complexity & illiteracy masks incentive growth connection. Envy overpowers. economic rationality
Measuring Economic Rewards
1. Income
2. Mobility
Measuring Economic Rewards:

Characteristics that affect distribution of INCOME background
2.willingness to work
3.willingness to take risk
4.occupational choice(garbage collector vs. nurse)
5.willingness to relocate
8.extraordinary talent(Jim Carrey etc.)
9.Gender(male waiter at hooters)
12.physical features
Measuring Economic Rewards:

2. Mobility

-Only recognize productivity/consumer preferences
-sometimes offend our idea of fairness

EX: Roger Clemmins:baseball and high salary
Lebron James-unfair but not replacable
How Gov't Defines Poverty

(know a lot)
1.reported cash income
2.poor spend $1.94 for every $1 of reported income

3.doesn't include non-cash

Evalutaion of Gov't intervention:

2-counterproductive(could make problem worse)
-Law of Supply problem
-corrosion of social ecology
-counter-incentive to personal and collective economic growth(allowing for inequality)
-counterfeit virtue (choosing to give to poor rather than being forced)
5 Factors of economic growth
Nothing comes close to effecting the way we live.

(Hand out Y)
1- Labor
3-Natural resources
4-Technological change
Technological Change
Expample of Sand Island

Seattle and Pants on head (hat) business
4 U's

Family teaches virtue


Family responsibility enlightens self-interest beyond the individual and beyond current consumption

Economic growth is a rising tide, when it goes up ALL ships go up (big or small)
Regressive Taxaion
as you make more, tax smaller percent of income
Progressive Taxation
Making more = getting taxed more

(Present time)
Proportional Taxation
Attempt at equality of results. % doesn't change no mater how much you make, flat tax.
Robots taking over people's jobs
-making robots creates more jobs
-men would more into other ares
-robots save more monsy to be spent in other areas to help economy

Same with farmers and better machines, there are not a huge # of unemployed farmers

reforms to inflation:
1.indexation:tie inflation rate to a certain price
2.MONEY GROWTH RULE: Money supply needs to be tied to GNP(goods and services)
Fallacy of Composition
Beliving that what is good for one individual is good for the group
Things that encourage Econimic Growth...

Question on test-
DIAGRAMS Q, Z, Y, & 4U's

1.Prevent coercion and fraud
2.Provide money
3.Snsidize or create the transportation and communication networks
4.Define property rights
5.Enforce the exchange agreements
6.Maintaining a stabel political environment.
7.Encouraging healthy competition
8.Subsidizing positive externalities, providing public goods and alleviating other market weakness
9.Providing neede capitol
10.Funding research and development of new technology
13.natural resources
14.technological change