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50 Cards in this Set
- Front
- Back
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Adam Smith published this on the economic status of America.
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The Wealth of the Nations
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The FIRST Tenant of Capitalism (Mentioned in the work of Adam Smith)
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Private property - the right to own property (NO EMINANT DOMAIN)
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The SECOND Tenant of Capitalism (Mentioned in the work of Adam Smith)
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Free enterprise - the right to manage/use the factors of production as you see fit
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The THIRD Tenant of Capitalism (Mentioned in the work of Adam Smith)
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Profit motif - the right to earn and keep whatever level of profit you want
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The FOURTH Tenant of Capitalism (Mentioned in the work of Adam Smith)
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Competition - companies may compete
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The FIFTH Tenant of Capitalism (Mentioned in the work of Adam Smith)
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Laissez Faire - the roll of government in business should be that of a ref (only watches and gets involved when there is an issue)
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The SIXTH Tenant of Capitalism (Mentioned in the work of Adam Smith)
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[price is determined by] the laws of supply and demand.
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INVISIBLE HAND
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There are three levels. markets should regulate themselves within these. Business owners start on one level. They then get together and form a conspiracy against the government to raise the price [RESULTS IN AN ECONOMIC PROFIT]. New firms enter the market with lower prices, forcing other companies to lower theirs. [RESULTS IN AN ECONOMIC LOSS]
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some arguments FOR capitalism
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1 it promotes economic mobility
2 provides an incentive (you keep what you earn) 3 promotes the most efficient allocation of resources (must be efficient and competitive or you're out of business) 4 psychological advantages (you feel good about what you've done) |
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some arguments AGAINST capitalism
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1 it is an impersonal system (it is careless about what you want/need)
2 suffers from prologed periods of inflation and unemployment (the business cycle) 3 private property and inheritance are major causes of inequity and the distribution of incomme (inheritence creates a compliancy of the idol rich) 4 suffers from an imbalance between private productions & social productions (private productions [vacations clothing as opposed to schools and highways] always dominate) |
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10 goals of capitalism
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-write down on paper-
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Production Possibilities Curve
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Represents all possible combinations of these 2 products that an economy can produce
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3 assumptions of a Production possibilities curve
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- fixed resources
- fixed technology - full employment |
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Why was there a population explosion in Central and South American populations?
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- machismo (the amount of children you have, the more wealth you have)
- lack of education (don't know about birth control) - need help farming - religion (says no birth control) |
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MALTHUS
title of essay? |
TITLE OF ESSAY: On Population
Believed "diminishing returns" amount of land available to grow food is fixed.by changing technology food production can be increased arithmatically.average family=6 children.4 survive,mary,have children.people reproduce geologically.bottom line? RUN OUT OF FOOD. from this, people developed the DOOMSDAY THEORY |
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Law of Diminishing Returns
Who? What? |
David Riccardo
As additional units of a variable factor of production are applied to a fixed factor of production, a point will be reached after which output per additional unit of input will increase at a declining rate. a student studying 1 more hour after 2AM |
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Law of Increasing Opportunity Cost
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Along a productions possibility curve, increases in the production of one product recquire larger and larger sacrifices of the other.
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4 factors of production
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-land
-labor -manufactoring -capital |
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2 Theories of Management
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Theory x: foritarian. does all planning and evaluation, sets goals, & is motivated through the carrot and stick (rewards system).
Theory Y: Collegial. workers/laborers work together. motivation is doing a good job. |
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Management
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The function of management is to coordinate the factors of production in an effort to do one of 2 things:
1. maximize profit 2. minimize cost |
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What is the payment for labor?
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WAGE OR SALARY
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What is the payment for land?
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RENT
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3 significant changes in labor
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-blue collar to a white collar
-more women -aging work force |
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LABOR FORCE
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Consists of all non-institutionalized people 16 yrs of age or older who are actively employed 15 hours per week or more, or who are actively seeking employment
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2 steps needed to create CAPITAL
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investment and savings
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What is the payment for capital?
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INTEREST
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Benefit of capital WIDENING over capital DEEPENING
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Don't have to hire new workers to get the job done. New workers and teaching them how to work can be costly.
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Benefit of capital DEEPENING over capital WIDENING
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You have the newest, most high tech equipment to work with
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CAPITAL
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Processed land used in the production and/or distribution of goods and services
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Eminent Domain
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At any time, the government can take yoru land. (we only RENT it).
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Difference between extensive and intensive use of land
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EXTENSIVE: Land is the dominant resource. - dairy and wheat farming
INTENSIVE: other factors domminate - fruit farming, gold mining. |
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ECONOMICS
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Study of the way in which people use their limited resources for the production, distribution, and consumption of the goods and services that they need and want
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Conspicuous Consumption
Who coined the term? What does it mean? Give an example. |
Kenneth Gailbraith
We buy to impress others. Buying a car so others think we are wealthy. |
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fallacy of composition
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what's true for the individual is not always true for the group
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Demand
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The entire schedule of amounts of a given product that people will buy at different prices during a given period of time.
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flat tax
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first 25000 is not taxed. every dollar after that is taxed 18%
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consumption tax/vat tax
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tax on EVERYTHING
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law of demand
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other things remaining equal. The higher the price, the smaller the number of units people will buy.
as price goes DOWN, quantity goes up. |
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The law of demand is based on:
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*limited income
*availability of substances *diminishing utility |
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CHANGES IN DEMAND
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1. change in the size of the market
2. anticipated changes in the price or availability of a product 3. change in utility (usefullness of a product) 4. change in real income (real V. nominal) 5. changes in the price of related products (compliments or substitutes) |
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The law of diminishing marginal utility
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as people acquire additional units of a product, the value of the utliity of each additional unit decreases
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Formula for an Economic Person
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mu1/p1 = mu2/p2 = mu3/p3
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Supply
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the entire schedule of amounts of a given product that will be offered for sale at different prices during a given period of time
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the law of supply
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as price increases, quantity increases.
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CHANGE IN SUPPLY
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1. change in availability of resources
2. change in the costs of production 3. change in technology 4. change in competition (quality, price, image, number of competitors) 5. anticipated changes in price of products |
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Market
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a place where buyers and sellers meet for the exchange of goods and services
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what is a price ceiling
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a way government interferes so it doesn't reach equilibrium. (municipal hospital care, public transportation, rent controls)
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what is a price floor?
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keeps prices from falling. example? minimum wage
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parity
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level of income that the government believes farmers should receive to have an acceptable standard of living.
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subsidy
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payment made to farmers to cut production
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