1) Economic Efficiency: Resources are scarceà societies use them to their max.
To increase efficiency= society accurately determines what to make.
2) Economic Freedom:Limitations on economic freedoms
Patriotism: Love of one’s . Passion that inspires a person to serve his/ her country.
3) Economic Scarcity and Predictability:People feel the government should provide a safety net – a set of government programs that protect people experiencing unfavorable economic conditions.
Example: social security
4) Economic Equity: Equal pay= equal work
Society does not value all jobs equally
5) Economic Growth:Standard of Living: Level of economic prosperity
Growing population= economy provides new jobs/ income
6) Additional Goals: Full employment, universal medical care, etc.
*When an economy prioritizes, there must be trade-offs.
4 Economic Systems:1) Traditional Economy: Habit, custom, ritual to decide what and how to produce things.• Not much innovation/ change• Revolves around family• Work divided along gender lines• Work to support entire group, not just themselves• No modern conveniences• 2) Market economy: Economic system based on trade• Capitalism• 3) Command Economy: • Centrally planned economy- only the government decides how the 3 questions will be answered4) Mixed Economy:Market-based economy in which the government plays a small role
Market: Buyers & sellers exchange things.1) Provide incentives to producers/consumers2) Transmit information 3) Distribute income among resource ownersExample: store
Specialization: Individual produces one or few goods/ services.Concentration of production efforts of individuals and firms on a limited number of activities
Market Participants: 1) Households (leading roleà consumers)2) Firms3) Government4) Rest of the world
Market Economies: Microeconomics
National Economics: Macroeconomics
Pure Market EconomyNo government. Private firms account for all production.Resources ownersà incomeInvisible Hand
Problems with a Pure Market Economy1) Difficulty enforcing Property Rights2) Some People Have Few Resources to Sell3) Some Firms Try to Monopolize Markets4) No Public Goods5) Externalities
Pure Centrally Planned Economy• All resources are government-owned• Public, or command, economy• Communism-Visible Hand
Problems with a Centrally Planned Economy
1) Consumers Get Low Priority
2) Little Freedom of Choice
3) Central Planning can be Inefficient
4) Resources Owned by the State are Sometimes Wasted
5) Environmental Damage
September 27, 2010
1) Who has received the benefits of economic growth during the past quarter century (pg 1)?
2) Why should we be concerned by a more unequal distribution of income?
1) What has happened to the number of minutes worked to buy food between 1919-1997? (pg 7)
2) What has happened to the amount of hours worked per square foot of housing between 1956-1996? (pg 6)
October 13, 2010
Elasticity of Demand: Focuses on how much the quantity will change in response to a price change.
Elastic = Responsive (Gum, Pizza, Cookies, etc)
Example Scenario: "A patient is given a presciption for a drug to control high blood pressure. The patient's insurance doesn't cover drugs, so the patient must pay out of pocket."
Why?????ELASTIC! Some people are not willing to pay a higher price for medicine. They are "non-compliant."
Inelastic = Unresponsive (Examples: Gasoline, Insulin, etc)