Exam I

Front 1

basic definitions of economics

Back 1

1) study of scarciety
2) "study of the allocation of scarce resources to satisfy unlimited wants"
3 study of the material reproduction of society

Front 2

general forms of economic society

Back 2

1) traditional
2) command
3) market systems

Front 3

3 Questions societies must answer

Back 3

1) What goods to produce
2) How do we produce them? (organization of labor, etc.)
3) For whom do we produce? (need vs. market)

Front 4

traditional society

Back 4

1) stable
2) low growth

Front 5

command society

Back 5

1) decision making is centralized (gov or big business)
2) (un)democratic? --mechanism for accountability

Front 6

market systems

Back 6

1) distribute resources on basis of supply and demand
2)commodities: land, labor, capital (man made aid to production)
3) market mentality

Front 7

mixed market system

Back 7

ex. farming, monopoly capitalism, market
1) scope of government

Front 8

role of government in mixed market system

Back 8

1) establish legal and institutional framework
2) allocate resources
3) regulation of trade
4) redistribution of income
5) macreoeconomic stability

Front 9

goals of macroeconomic policy

Back 9

1) economic growth
2) price stability (inflation and deflation)
3) economic security
4) equitable tax burden

Front 10

problems of macroeconomic policy

Back 10

1) goals may conflict (ex. inflation and unemployment)
2) disagreemnet over means
3) economic rationalization

Front 11

demand curve

Back 11

a schedule which shows the amount of a good that buyers are willing and able to purchase at each price during a specific time period

Front 12

change in price

Back 12

moves along the schedule, yielding a change in quantity demanded

Front 13

changes/shifts in the demand curve

Back 13

1) tastes and preferences
2) income
3) price of a related good
4) changes in expected prices

Front 14

normal good

Back 14

increase in income correspond with and increase in demand

Front 15

inferior good

Back 15

increase in income correspond with a decrease in demand

Front 16

expectations

Back 16

1) expect a rising price, demand increases
2) expect a falling price, demand decreases

Front 17

related goods

Back 17

complements vs. substitions

Front 18

supply curve

Back 18

a schedule which shows the amount of a good that sellers are willing and able to put on the market at each specific price during a specific time period

Front 19

shifts in the supply curve

Back 19

1) price of inputs (costs of production)
2) changes in technology
3) price of related goods
4) taxes and subsidies (taxes on suppliers increase costs while subsidies reduce costs of production)
movement along: caused by change in price of that particular good

Front 20

ex. of supply shifts (?)

Back 20

1) increased cost of production, shift in (increased price)
2) increased techonology, shift out
3) tax increase, decreased supply

Front 21

equilibrium

Back 21

1) position of res: no tendency for change
2) no surpluses or shortages

Front 22

price ceiling

Back 22

imposed below equilibrium (when there is a tendency to rise)
ex. to alter resource allocation: discourages production
ex. to promote equity: rent controls
1) typically results in shortages
2) need for new rationing system (other than price)

Front 23

price floor

Back 23

imposed above equilibrium
ex. maintain competition: keeps production upu
ex. equity: minimum wage
1) typically results in a surplus
2) need to get rid of surplus

Front 24

micro/macro economic logic: minimum wage

Back 24

1) micro: increase unemployment
2) macro: decrease unemployment

Front 25

households

Back 25

demand side of the product market
assumptions
1) consumer sovereignty
2) consumer wants are given (no manufactured demand)

Front 26

accepted sequence

Back 26

1) consumer wants
2) reflected in the market
3) produced by business

Front 27

revised sequence

Back 27

1) business
2) consumer
--massive investments create incentives to manage demand
--growth of large coporations makes the management of demand necessary
--emergence of the affluent society makes the management of demand possible

Front 28

first great merger wave

Back 28

1898-1902
1) increase in capital/producing unit
2) increase in financial size of business
3) separation of ownership from control
4) multi-function firms, conglomerates

Front 29

business response to competition

Back 29

1) better product
2) buy up other companies, consolidate
3) favorable government legislation
4) bomb the competition

Front 30

business and demand in the resource market

Back 30

underlying assumption: labor is irksome + needs incentive
(universal assumption of human nature)

Front 31

labor vs. labor powewr

Back 31

labor is volitionable
acutal work=capacity to work (commodity fiction)

Front 32

extraction of labor from labor power

Back 32

1) incentives
2) disincentive
3) peer pressure

Front 33

scientific management

Back 33

1) Frederick Taylor
2) time and motion studies
3) removes skill, power, moves to capital (deskilling
4) humans interchangeable

Front 34

households and supply in the resource market

Back 34

1) industrial sabotage
2) stint: collective slowing down of pace
3) strike
4) legislation
5) violence (Ludlow, Colorado, 1914)

Front 35

production possibilities curve

Back 35

a snapshot picture showing all possible combinations of two goods that could be produced at 1)full employment and 2)maximum efficiency
shows opportunity cost, a consequence of choice

Front 36

opportunity costs

Back 36

1) choosing something is always measured in terms of what you gave up
2)costs of choosing among alternatives (limited resources)

Front 37

assumptions of the ppc

Back 37

1) 2 goods
2) resources are fixed in quantity and quality
3) techonology is constant

Front 38

"bowed" shape

Back 38

we use the most efficient/adequate goods first; cost increases as these are depleted

Front 39

implications of the ppc

Back 39

1) shows the maximum aount that could be produced given resources
2) downward slope shows resources are limited
3) bowed outward shows resources are not fully interchangeable (increasing opportunity costs)

Front 40

points on and off the curve

Back 40

fuzzy line vs. exact point

Front 41

underemployment

Back 41

not working at comparitive advantage (vs. unemployment)

Front 42

shifts in the ppc outward

Back 42

1) increase in quantity of resources
2) increase in quality of resources
3) increase in techonology

Front 43

ubiased shifts ppc

Back 43

increase in techonology applicable to both goods

Front 44

biased shifts

Back 44

increase in technology applicable only to one good

Front 45

does it make any difference what combination of goods we produce

Back 45

capital leads to more goods
(if we produce at A now we will have less growwth in the future...vs. B)

Front 46

what determines the mix of goods for a society

Back 46

1) traditional
2) command
3) market

Front 47

supply side waste

Back 47

occurs when we operate inside the ppc due to under-employment; resources may be used but are not used efficiently

Front 48

demand side waste (mostly labor, capital)

Back 48

occurs when we operate inside the ppc due to failure to maintain full employment (not enough demand to keep people employed)