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UNI economics > chapter 2 - technological change, population and economic growth > Flashcards

chapter 2 - technological change, population and economic growth Flashcards

1
Q

how are economic models linked to this module?

A

they help to explain the industrial revolution in britain

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2
Q

what matters when people make economic decisions?

A

wages, cost of machinery and other prices

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3
Q

what interacts to create a vicious circle of economic stagnation?

A

population, productivity of labour and living standards

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4
Q

what was thomas malthus’ view?

A

population grows geometrically and food arithmically and therefore even with technological advances people will still run out of food as population grows at a faster rate than food

pessimistic view of economic progress

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5
Q

what is the industrial revolution?

A

a time of radical invention that allowed the same output to be produced with less labour

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6
Q

what happened in britain from 1200 to 2000

A

real wages stayed the same up until 1800 in which this is where britain escaped form the malthusian trap

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7
Q

why do we use model s in economics?

A

to be able to look at the big picture

cant describe every single detail

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8
Q

how do you create an effective model?

A

distinguish between the essential features of the economy that are relevant to the question

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9
Q

how are models in economics used?

3 steps

A

1) built model to capture elements of economy that mattered in terms of question
2) used model to show interaction between elements
3) conduct experiments/gather data that show what happens when you change the economic conditions

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10
Q

what is an equilibrium?

A

situation in which doesn’t change unless a force for change is introduced that alters the basic data

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11
Q

what is subsistence?

A

the action of maintaining oneself especially at minimal level

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12
Q

in the malthusian model was is an equilibrium?

A

wage equal to subsistence

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13
Q

what is the process in which a model is built?

A
  • construe simplified description of the condition under which people take actions
  • describe in simple terms what determines the actions people take
  • determine how each of their actions affects others
  • determine the outcome of these actions
  • insight into what happens when condition change
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14
Q

why are mathematics used in models?

A
  • describe models
  • ## part of the language of economics
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15
Q

how does a model usually begin?

A

with assumptions or hypotheses about how people behave

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16
Q

what does ceteris paribus mean and why is it important?

A

ll other things remain unchanged

it is hard to isolate everything in economics

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17
Q

what is an assumption in how people make choices?

A

economic rents

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18
Q

in terms of this module what are example of ceteris paribus?

A
  • prices of all inputs in firms are the same
  • all firms known technologies in used in others
  • attitudes towards risk are similar among firm owners
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19
Q

what is meant by relative prices and why is it important?

A

ratio of things (not absolute level) the price of one option relative to another

economics focuses on alternatives and choice

characteristic of an economic model

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20
Q

during the industrial revolution what were the prices that mattered to most to inventors and firms?

A
  • energy prices (coal)
  • wage rate
  • ratio of the two
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21
Q

what is an innovation rent?

A

a form of economic rent

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22
Q

what is one of the reasons in which capitalism is such a dynamic system?

A

economic rents
something you would like to gain
in that anyone seeking rent is likley to change price etc

23
Q

what is the calculation for econmoic rent?

A

benefit form option taken - benefit fro the next best option

24
Q

what are the basic institutions of capitalism?

A
  • markets
  • firms
  • private property
25
Q

what is meant by a technology?

A

anything that helps produce someone faster, better or cheaper

producing an output

26
Q

what can technologies promote?

A

cost reducing innovation

27
Q

how do firms decide which technologies to choose?

A

ones that are inferior to others

can be displayed on a graph

28
Q

what does making a decision about a technology require?

A
  • making an assumption about the goal of the firm

- relaive prices of hiring workers and purchasing any materials

29
Q

how do a firm evaluate the cost of production using different technologies?

A

by working out the cost of all technologies

cost = (wage x workers) + (price of material x amount of material)

30
Q

what is an isocost line?

A

line long which all combinations of two factors cost the same amount

31
Q

how would you work out an isocost line to work out how many people will work and tonnes of coal?

A

find out how many people could work for £80 and work out how much coal you could by for that much

32
Q

what will change the slope of an isocast line?

A

the relative prices of the two inputs

33
Q

what is an example in which relative prices changed in relation to an isocost line?

A

industrial revolution

wages rose

34
Q

how do you work out economic rent?

A

revenue - cost

35
Q

why do innovation rents not last forever?

A

when they first innovate they have little competaition and therefore are gaining the highest economic rent but as others start to innovate in a similar way they lose economic rents

36
Q

how do cost reducing innovation raise the profits?

A

as if they are making the same revenue as before there costs will be smaller and therefore economic rent (profit) will increase
this can be worked out on a n isocost line

37
Q

what is the major difference between pre industrial revolution technologies and post technologies?

A

old - labour intensive (capital and energy saving)

new - capital intensive (energy intensive and labour saving)

38
Q

why was there an incentive in Britain to replace workers with machines around the 17th century?

A

as the price of wages relative to coal and other materials was high

cost reducing innovation

39
Q

how can the industrial revolution in britain be explained, e.g why did it take place when it did?

A

in the 16th centre wages ratline to cost of energy and capital goods were higher in britain than elsewhere and this was not the case in earlier centuries

technology grew rapidly ocompated to any other place

40
Q

what are the factors that lead to the diffusion of technologies across the world?

A
  • further technological progress, take smaller inputs to produce larger outputs
  • wage growth and falling energy costs
41
Q

why was there falling energy costs around the world?

A

cheaper transportation

42
Q

how can the flat bit of the hocky stick be explained?

A

malthus built a new model that helped to explain the stagnation pre industrial revolution that meant that GDP didn’t grow

43
Q

what is one the most important concepts in economics that helps to explain stagnation?

A

diminishing average product of labour

44
Q

how do you work out the average product of labour?

A

total output / total labour quantity (amount of workers)

45
Q

what is DAPL?

A

state that whilst increasing one input and keeping all inputs the same the output will initially increase but further increases will have limited effect and will eventually have no effect or a negative effect of output

46
Q

how does DAPL occur in relation to technologies?

A

as population increases there is a need for more food
at the start farmers start growing more initially earning more
as there is more people more food is grown but the average product per worker decreases

47
Q

how did the stagnated part of the hockey stick end?

A

improvements in technology allowed more product per worker

real wages started to rise
GDP rises

48
Q

what was the other reason that explained stagnation?

A

malthus stated that increased living standards create an increase in population

49
Q

how is the subsistence level related to malthus population idea?

A

the idea that if population grows the amount of food will decline per person
it will decline to the point in which population will stop growing as result of lack of food and will remain at the subsistence level
anything below this level will mean they will reduce in size

incomes will settle at SL

50
Q

what did malthus state about unlimited substance?

A

if we have US then population will keep growing but eventually fill a country and population growth would push down incomes as a results of DAPL

51
Q

what is malthus’ model - the effect of a good harvest?

A

a good harvest leads to rise in farmers income to population rise to less land per farmer to average output falls to farmer income falls and eventually leads back to the equilibrium level

52
Q

how can malthus’s ideas be linked to technological advances?

A

the fact that as a new technology increases it will be the same as if foof output rose in the fact that it would still lead to lower income

will increase productivity but not wages

53
Q

why is the malthusian model not a reasonable description of the world?

A

due to the permanent technological revolution

emerge living standards increased rapidly and premaantly after the capitalist revolution

UNI economics (9 decks)

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