Micro 1.1.5+6 Flashcards
Normative statements?
Opinionated
Positive statements?
Fact
Why is economics a social science?
Uses scientific methods to build theories
Problem of scarcity?
Unlimited wants, finite resources
Factors of production?
Land
Labour
Capital
Enterprise
What is a free good
No opportunity cost
Difference between command and market economies
Planning mechanism allocates resources vs price mechanism allocates resources
Socialist vs capitalist economies
Means of production state owned vs privately owned
1940s UK economy ?
State ownership coal, rail, steel
1944 Creation of NHS
1960s/70s UK economy?
People said public sector inefficient and wealth consuming
1980s/90s
Privatisation, deregulation, marketisation (changing market price for goods)
What did Adam smith believe?
Capitalist economy good
People should pursue their self interest with government repression
They act like they are controlled by an “invisible hand” to guide and create the most common good if acting in self interest
But if self interest lead to greed and oppression, gov should intervene
What did Friedrich Hayek believe?
Too complex to organise big economic regulation
Theory of “minimum state”
Redistribution of wealth through public treasury
Neoliberalism
What did Karl Marx believe?
Communism.
No private property or controlling central authority
Common means of production
What are value judgements ?
An assessment of something as good or bad in terms of one’s standards or priorities