Political Economy Final

Front 1

Adam Smith

Back 1

Measure of Welfare: output per capita
Division of Labor: Increases wellbeing (increases worker's dexterity, saves time between tasks, leads to invention) Self-interest-->Social Welfare

Front 2

David Ricardo

Back 2

Comparative Advantage (Exploit the good who's production has the lowest opportunity cost)
Free trade increases total wealth

Front 3

Market Price

Back 3

Price at which goods are sold
-In the long run its equal to the cost of producing that good (in perfect competition)

Front 4

Effectual PRice

Back 4

Those willing to pay the natural price

Front 5

Absolute Demand

Back 5

Those qwilling to pay some price for the good

Front 6

The real measure for the "exchangeable value" of a commodity
(Adam Smith)

Back 6

Labor

Front 7

Smith
Value in Exchange

Back 7

Value for which a good is traded (diamonds--high)

Front 8

Value in Use (Smith)

Back 8

Utility derived from the good (for water the value is high)

Front 9

Ricardo
"Value of Reproducible Goods"

Back 9

Amt of labor needed to produce them

Front 10

Ricardo
Value of nonreproducible goods

Back 10

Determined by scarcity

Front 11

Ricardo
Wage

Back 11

Tend to the minimum workers need to survive

Front 12

JEvons
"Total Utility"

Back 12

Value in Use (increasing with quantity)

Front 13

Final Degree of Utility (Jevons)

Back 13

Value in exchange (decrases with qty)

Front 14

Law of Indifference

Back 14

In the Open market, at any one point, there cannot be two prices for the same article.
MU1/p1=MU2/p2

Front 15

First Degree Price Descrimination

Back 15

Price Differs for every unity

Front 16

Second Degree Price Discrimination

Back 16

Price differs per quantity purchased

Front 17

Third Degree Price discrimination

Back 17

Price DIffers Per Buyer

Front 18

Indifference Curve (Edgeworth)

Back 18

Set of points that provide an individual with the same level of utility

Front 19

Contract Curve

Back 19

Set of points x so that there is no point y that both prefer to x

Front 20

cardinal utility

Back 20

utility differences have meaning

Front 21

ordinal utility

Back 21

Only relative levels of utility have meaning

Front 22

Pareto Optimality

Back 22

An allocation that is optimal for a set of individuals because there is no allocation that makes one player better off without making another worse. off

Front 23

Karl Marx

Back 23

Capitalism: Exploitation of Workers

Front 24

Marx
USe Value

Back 24

Utility of a thing

Front 25

Marx
Exchange Value

Back 25

Proportion to which use values of one sort are exchanged for those of another sort

Front 26

Measure of Value

Back 26

The quantity of labor power and labor time that are socially necessary to produce a good.

Front 27

Surplus Value

Back 27

Difference Between the cost of maintaining labor and the daily expenditure at work (profit)

Front 28

Constant Capital

Back 28

Physical Capital (Increases in proportion to variable capital).

Accumulation and Competition
-Demand for labor rises faster than supply
- Capitalists want to save on labor costs by substituting toward capital
-They increase the intensity of labor by using machines. THEREBY displacing workers and profits are extracted by workers

Front 29

Variable Capital

Back 29

Labor.
long run tendency of Profits is DOWN

Front 30

Dialectical \

Back 30

Dialectical : HIstory conatins its own seeds of change

DIalectical Materialism

Front 31

Materialism

Back 31

Grounded not in the world of ideas but in the social and physical environment

DIalectical Materialism

Front 32

Superstructure

Back 32

Noneconomic activity and thought bound by laws, supervised by government and inspired by religion and philosophy

Front 33

Infrastructure

Back 33

Conditions of Production
-It determines superstructure
-Dominant Class builds its own laws to justify its regime
-Change happens because of changes in economic relations.

Front 34

Marx & Self Interest

Back 34

Self-Interested capitalism creases a reserve army of unsatisfied people

Front 35

Popper

Back 35

A Critic of marx cuz he thought Marx's theory was unfalsifiable and his prophesy was wrong.

Front 36

Von Neumann

Back 36

A father of game theory

Front 37

Nash Equilibrium

Back 37

A vector of strategy such that, given the action of the other players, no individual player wwants to change its actions.
-BEst Response function maximizes utility.

Front 38

Malthus

Back 38

1. Food is necessary for the existence of man
2,. Passion btw the sexes in constant
Population increases geometrically, subsistence increases arithmetically
HATED poor laws

Front 39

Preventative Check

Back 39

Malthus

Anticipation of a future, lower quality of life prevents one from having children

Front 40

Positive CHeck

Back 40

Malthus

Poor living conditions prevents an increase in population that has already begun

Front 41

Hardin

Back 41

Selfinterest of man-->bad outcome
"Poor Relief" creates greater misery by letting poor ppl survive in harsh conditions.
-world population will explode, everyone will be poor
Hardin Ignored technological progress
and that the decision to ahve children responds to incentives.

Front 42

Externalities

Back 42

Coase

Difference btw the private and the public costs of someone's decision (pollution/vaccination)

Front 43

Pigou's Solution

Back 43

TAX to internalize externalities
-require informaiton but generate revenue

Front 44

Coase's solution

Back 44

Strong definition of property rights
-ignore distributional effects
-assume that there are no transaction costs

Front 45

Axelrod

Back 45

Ppl can cooperated if they face each other for an unknown but long period of time.
-trench warfare
Tit For Tat
-Avboidance of unecessary conflict
retaliation in the face of uncalled for defection by the other
-forgiveness after a first response to defection
-clarity of behavior

Front 46

Schelling

Back 46

Deterrence: The efficient exploitation of potential rather than actual force

War is rational (productive & realistic)

Front 47

Subgame

Back 47

An extensive game carved out of another game

Front 48

Condorcet

Back 48

Majority rule is not always best
-threshold btw majority and super majority can depend upon the importance of certain mistakes.
-if each individual has a probability of making a mistake greater than one half then as the group reaches infinity the group is certain to make a wrong decision.

The winner of a plurality vote among multiple options may lose any pairwise vote. The winner of any pairwise vote may not exist.

Front 49

Arrow's Theorem

Back 49

It is impossible to aggregate rational individual preferences into rational group preferences.

Front 50

Schumpeter

Back 50

There is no such thing as a "will of the ppl"

Socialism is not democratic.
DEMOS- People (but it can't be everyone cuz we restrict by age etc. )
Kratein-Power (but govt for the people isn't a useful criterial cuz many despots inposed popular measures and govt BY the ppl where everyone rules isn't practical).

Front 51

Schumpeter's definition of democracy

Back 51

Selection rules==competitive election

Front 52

Riker

Back 52

Studied formal positive political political theory in rochester

Front 53

Downs

Back 53

Competitivness of elections

Main motivation for a political party is to attain income/prestive/power (implementing policies are an afterthought) Therefore candidates converge to the voters' ideal point and mobilize varios groups keeping extreemists out.

Front 54

Olson

Back 54

Types of groups/collective action
Privileged: Eacxh other members want to see the collective good provided even if it must pay in full itself. Successful.

Intermediate: No single member wants to pay the full cost however their contributions are non negligible.

Latent: Individual contributions are negligible.

Front 55

Harrod Domar Model

Back 55

PerCapital Income Growth Rate:

Increases wilth an increase in the savings rate and increases with a DECREASE in the population growth rate, capital-output ration and rate of depreciation of capital.

Front 56

SOLOW

Back 56

Long run growth rate per capital is ZERO.

A faster population growth rate decreases output per capital and increases the growth rate per capita.

Front 57

Economic Growth

Back 57

A long run rise in per capita income

Front 58

North And Thomas

Back 58

Efficient institutions align individual benefits/costs with social benefits /costs.

England zGLorious Revolution versus Spain and France

Front 59

De SOto

Back 59

Capitalism benegits the poor
Legal system hinders economic growth

Front 60

Weber

Back 60

Protestant work ethic
-religion produces industry and frugality-->wealth