day 8 Flashcards
What are the basic tenets of naturalistic thought, and how are they reflected in ethical theory?
- everything knowable is part of the physical world(thee are no spiritual or metaphysical parts of the world that are knowable)
- religious leaders and other authorities have no claim on knowledge of the physical world
- the physical world is governed by the immutable laws that are discoverable through the scientific method
What is the difference between positive and normative analysis?
positive: how it is naturally
normative: how it should be
ex: P)the backpack is blue N)the backpack should be blue-this should be the norm
How does economic liberalism relate to liberalism more broadly?
economic liberalism follows the same idea that we own ourselves an dour property therefore able to sell and trade and do what we want with that property. free exchange is the foundation of economic liberalism
What are the main factors driving economic growth?
- individual decisions to produce more
- discovery of new resources
- improvements in technology
- specialization and exchange
How are the concepts of opportunity cost, specialization, comparative advantage, and exchange related to one another?
opportunity cost-how much must be given up to produce it (in terms of other goods)
specialization-someone good at making/producing one item or service
comparative advantage-whoever got the lowest cost to produce it
What is equity-efficiency trade-off?
don’t know
What are the liberal and utilitarian rationales for free exchange?
libertarianism: ownership and exchange of property are natural rights
utilitarianism: specialization and exchange increase the welfare of the people and nations
sometimes they’re at odds with each other but not in respect to free exchange
The role of government in a market economy
a) prevent coercion and fraud
b) provide money
c) provide basic transportation and communication
d) define property rights
e) enforce the exchange agreements
role of prices and profits
signals business to move their resources form one sector of the economy to another
a) prices ration scarce goods and valuable resources
b) prices and profits act as incentives to change behavior of individuals and businesses
c) prices and profits send signals to households and businesses that influence their future plans
role of prices and profits
signals business to move their resources form one sector of the economy to another
a) prices ration scarce goods and valuable resources
b) prices and profits act as incentives to change behavior of individuals and businesses
c) prices and profits send signals to households and businesses that influence their future plans
implications of specialization and the law of comp adv.
a) generates a tendency towards full employment of all resources in their most preferred use in an economy
b) it creates the widest possible gains form exchange or trade
c) it promotes a great deal of economic interdependency
4 basic economic principles for market pricing
law of demand: as the price goes up individuals will buy less
law of supply: as the price of a particular good or service rises, suppliers will produce more of that good or service
the equilibrium price: the price at which the quantity demanded is equal to the quantity supplied
the role of profits: defined above
