Malthusian Economics Flashcards
Average Product of Labour (APL)
Total output divided by Total Input
Marginal Product of Labour (MPL)
Change in Output divided by Change in Labour
Total Subsistence Output
Number of Labour (I.e number of farmers) Multiplied by the Subsistence Level
Equilibrium
Occurs when total output equals the substance level or is close to it.
Calculate Percentage Increase
Output multiplied by percentage increase- 800 (output) x 1.3 (30% increase)
How is the Malthusian Trap Explained?
-Better technology or way of producing output, allows better sustainability which leads to a rise in living standards temporarily
-Due to this number of people may rise, which will increase the population over the subsistence level.
- Better technology leads to more productive output, leading to population growth which leads to a cyclical circle back to the same situation again.
Explain the Malthusian Model
Land and Labour are the two inputs of the production process. Land is fixed and population is variable
- Agricultural output determines living standards
- Living standards affect the size of the population
- Size of the population affects agricultural output
The Malthusian Trap
In the model, technological innovations enables larger population but not above subsistence income levels.
Index
Value of some quantitive amount relative to its value at some other time (the reference period) usually normalised to 100
‘Real’
The money wage, that is adjusted each year to take into account the change in prices over time- Real buying power of the money.
Subsistence Income
Just about high enough for the population to reproduce- higher income means population grows and lower income means population shrinks
Explain the function of the ‘hockey stick’ model
Most people generated their income from agriculture, living standards were dependent on agricultural production. Malthus argued that sustained increase would be impossible.
Population expands as living standards increase, and as population expands labour on land becomes less productive.
Production Function
Y=F (X) ‘y is a function of x’
Poverty trap
Population rises when agricultural productivity rises. More children are born and will eventually work on the land, which will lead to less productive labour, lower living standards, and population will decrease again,
Define Capitalism
An economic system characterised by a particular combination of institutions
Three main aspects of Capitalism
- Private property
- Firms
- Markets
Private Property
Ownership of property In an individual’s right. Cannot be touched but you have the right to dispose of it.
Individuals, families or NGOs
Markets
Connect people who have mutually beneficial actors.
Exchange of goods, buying and selling
Encourages competition
Firms
An economic organisation in which private owners of goods, hire labour to produce goods and services to sell on a market to make a profit.
Affects of Capitalism on the economy
Specialisation, competitive markets, merit based system, goods and services like education and infrastructure are provided.
Innovation and technological growth.
Malthusian Trap
Technological growth outpacing population growth
Falling birth rates with rising incomes
Increase in education and skills
Transformation from agriculture to Industry
Define Economics
The study of scarcity and its implications of resources, production of goods and services growth and production over time.
First Industrial Revolution
18th and 19th century- shift from manual labour to mechanisation
Mechanised looms, steam engines
Affected the agriculture and textile industries
Second Industrial Revolution
Late 19th early 20th century
Electricity, mass production, railways, telegraph
chemicals, automobiles, electrical engineering
Faster cheaper production, labour market disruption
