Economics concepts and resource allocation Flashcards
What did Begg et al 2020 say about economics?
Economics is “the study of how society decides what, how and for whom to produce”
Which decisions do planners make to influence the use of scarce resources?
What should be produced on vacant sites?
How much land should be allocated and for what eg housing
How much land should be allocated for affordable housing
How to regulate/steer/stimulate/influence market allocation
Economists tend to be what?
Pragmatists
Planners tend to be what?
Idealists
What is the main economic problem for planners?
Resource allocation
Name the fundamental questions of economics (3)
What to produce?
How to produce it?
Who to produce it for?
What are the 4 factors of production?
Land
Labour
Capital
Entrepreneurship
What does PPF/PPC stand for?
Production Possibilities Frontier / Curve
What does the PPF represent
The opportunity cost of producing one good vs another
What is it called when resources are scarce?
Scarcity
What is an opportunity cost?
The trade off made to produce a certain amount of goods over another
Why does PPF usually depict a concave shape?
diminishing marginal returns law
What does the law of diminishing marginal returns state?
You will get less and less output for any additional input added
What causes diminishing marginal returns?
Limited inputs
Insuffcient capacity
Inefficiencies in the production process
What do points on a PPF curve represent?
PPF effeciency
What factors affect PPF efficiency in urban economics
Planning Policy
Land Availability
Financial Resources
Technological Advancements
Environmental Sustainability
What is Pareto Optimality
Social efficiency
What does Pareto Optimality refer to?
A situation where all possible improvements have been achieved by making changes in production or consumption that make at least one person better off without making anyone worse off
Who is Vilfredo Pareto (1848-1923)?
Italian economist and sociologist, famous for contributions to equilibrium theory as a mathematical economist
What is Social Welfare Function (SWF)?
A mathematical representation of individual or household utility or wellbeing - it functions as a way to represent how desirable different states of society are, taking into account the wellbeing of all individuals in that society
What do higher levels of the SWF curve signify?
Greater societal wellbeing
What do lower levels of the SWF curve signify?
Lower societal wellbeing
What does analysing the optimality point allow us to do?
Identify optimal resource allocation (pareto-optimal allocations
What does the PPF reflect
Effcient production possibilities
