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economics
the coordination of wants & desires given the mechanism
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3 central problems of coordination
- -what to produce
- -how to produce
- -who gets it
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if the marginal cost is more than the marginal benefit
don't do it
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if the marginal cost is less than the marginal benefit
do it
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opportunity cost
the benefit you might have gained by choosing the next best alternative
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market economic force
invisible hand
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social economic force
invisible handshake
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political economic force
invisible foot [legal]
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positive economics
economists often disagree with each other and occasionally themselves, but they can all agree: people respond to incentives
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normative economics
"you should give the extra to a food bank"
[if it says should or ought on the test is the answer]
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efficiency
any point on the curve is consider efficient
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technical change
why the curve can move
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points outside the curve are considered:
impossible
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law of one price [goods]
creatable goods should be sold at a similar price
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law of demand
price goes down, quantity demand goes up, other things constant
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demand factors
- income
- price of other goods
- tastes
- expectations
- taxes or subsidies
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supply factors
- price of inputs
- technology
- expectations
- taxes & subsidies
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equilibrium
where supply and demand intersect
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QS > QD
excess supply surplus
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QD > QS
excess demand shortage
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division of gains
smaller countries get more of the gains than larger countries
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difference between recession and depression
- recession is when you know someone who lost their job
- depression is when you lost your job
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economies of scale
if you have economies of scale you get more gains
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law of one prices [wages]
compresses wages [all should be paid the same]
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