Unit 1 - 经济基础 - part 1 Flashcards
- economic problem is
Limited resources 与unlimited wants的矛盾
Resources are limited but people have unlimited wants, which causes scarity. The economic agents have to make choices (opporutnity cost).
The basic economic problem is concerned with 【how best to allocate scarce resources】 in order to satisfy people’s unlimited needs and wants.
OC definition
The opportunity cost is the cost expressed in terms of the next best alternative that is forgone.
OC的公式+中文理解
例如在PPC中
每多一个产品XXX，需要牺牲掉多少个YYY
因此 OC = △YYY / △XXX
例如 OC = -4 / 2 = -2
就代表了每多生产一个X产品，需要牺牲 2个Y产品
例如 OC = - 50/20 = -2.5
就代表了每多生产一个X产品，需要牺牲 2.5个Y产品
why do consumers face the economic problem
Most consumers are unable to buy everything that they want at the same time. They therefore have to make a choice.
For example, a family may decide to buy a new car rather than have a holiday.
The holiday forgone will be their opportunity cost.
why do workers face the economic problem
A worker may be able to work longer hours and earn more money, but this will involve making a choice and the sacrifice that is given up is leisure time, reduced as a result of working
longer hours.
The leisure forgone is the workers’ opportunity cost of working extra hours.
why do producers face the economic problem
Producers will only have so many resources at their disposal, for example, a fixed number of workers and machines, therefore if they produce more of one good, such as cars, they will have to produce less of another good, such as vans.
The production of vans the producers forgone is their opportunity cost of providing more cars.
how does the government face the economic problem
Governments have a limited amount of money to spend on essential services, therefore if they spend more on one service, such as education, they will have to spend less on another service, such as defence.
The reduced provision of national defence is the opportunity cost of greater spending on education
Land definition
the natural resources required in the production process, such as oil, coal, water, wood, metal ores and agricultural products.
Labour definition
the human resources required in the production process, including skilled and unskilled labour.
capital definition
the manufactured resources required in the production process, such as machinery, tools, equipment and vehicles.
Enterprise definition
the skills a business person requires to combine and manage the other three factors of production successfully. He/she also takes risks
role of enterprise
- Take risk
Business operation is risky. Revenue may decrease unexpectedly if market demand drops during economic downturn. Cost may increase unexpectedly if there is a production disruption. As a result, profits may become negative, which means the returns to enterprise is negative.
- Organize the other three fop to achieve goals such as profit maximisation
The higher the profits generated by a specific factor of production, resulted from either higher productivity or higher output price, the more enterprise will demand the factor to expand output.
what is income
returns to fop
Land — rent
Labour — wages and salaries
Capital — interest
Enterprise — profit
- OC的关键字是
Forgone OR 牺牲 OR 放弃
- ____________________导致了我们一定要做选择，做选择也就是_________________的概念
(Limited resources, unlimited wants)导致了我们一定要做选择，做选择也就是OC的概念
- Resources 近义词
fop
- Factors of production 是 input / output
input
- Goods and services 是input / output
output
PPC definition
The production possibility curve (PPC) represents the maximum combination of goods and services which can be produced in an economy at a particular time, using all of its available factors of production.
- It represents the productive capacity of the economy.
- It is usually concave because of increasing opportunity costs.
if an economy produces on the PPC
- full use of fop.
- All fop are used efficiently.
If production is within PPC:
underutilization of fop.
- Resources are not used efficiently. E.g. there is an insufficient use of labour, so that there is unemployment
- Do not exploit growth potential, output too low
- Less competitive
If production is outside of PPC:
unobtainable.
- The economy does not have sufficient resources to produce at this point.
PPC is downward sloping because
because of scarcity. To produce more of one good, another good has to be sacrificed as resourcesa limited. The other goods sacrificed represents the OC of producing one good
If PPC is straight, it means
constant OC
there is no loss of efficiency when the output of a good increases. The amount of sacrifice, in terms of other goods forgone, is constant
If PPC is concave, it means
increasing OC.
As more is being produced, resources that are less suitable for the production of the good are also used, such that productivity drops. This means the extra gain in output will be low, whereas the sacrifice in terms of the other goods keeps increasing.
In reality, different resources are suited for the production of different goods, therefore the PPC in real life is more likely to be concave rather than straight
Role of enterprise
- Enterprise is responsible for allocating the other three factors of production, including labour, land and capital.
- The rewards to enterprise are profits.
- He or she will try to allocate resources in the most efficient way in order to maximise profits. They will try to minimise costs.
- For example, the enterprise will use more labour if wages decrease relative to the interest rate, the cost of capital.
- Enterprise also bears risks.
- The second function of the enterprise is to bear risks.
- This is because unlike the other resources, whose income are certain, profits are not guaranteed.
Occupational mobility definition
Occupational mobility refers to the extent to which an fop is able to move between uses
e.g. labour occupational mobility refers to the extent to which labour is able to move between jobs. Retraining and upskilling help workers to improve occupational mobility.
- Geographical mobility就是_____________，可以由________________提高
easiness to move between different locations.
better transportation
- Geographical immobility可以由_________________________导致
high fixed costs in an area; family ties
- 经济中，income就是___________________________________
rewards to fop
- 四个fop的returns各自是________________________________________________
Land — rent
Labour — wages and salaries
Capital — interest
Enterprise — profit
how to improve labour’s occupational mobility
Retraining and upskilling
Edcuation
better health and nutrition
how to improve labour quality
Improved human capital: education and training and better health care
长期改善：教育、医疗
how to improve labour quantity
Over the long term: a natural increase in population
长期增长：人口增长
Immediately, net immigration of people of working age would be likely to lead to a greater availability of workers
短期增长：移民
government policy measures. For example, a rise in the retirement age would increase the supply of labour
政府政策：例如延迟退休、生育补贴、二胎三胎政策等
More women entering the labour force: The proportion of women who work varies from country to country. For example, in 2013 only 15% of women of working age were in the labour force in Saudi Arabia, while 75% of women in Norway were in the labour force.
更多女性参与劳动力
how to improve capital quantity
More investment.
Better policies to encourage investment
how to improve capital quality
Technology advances
how to improve land quality
Fertilisers and irrigation and drainage schemes
化肥、种植技术、灌溉技术
how to improve land quantity
discoveries, for instance, of new oil fields and gold mines
发现新的自然资源
Land reclamation: For instance, in recent years, Dubai has added considerably to its land area by reclaiming land on which it has built houses, hotels, marinas, theme parks and beaches.
填海造地
how to improve enterprise quantity
Deregulation and privatisation may promote entrepreneurship
更自由的营商环境
how to improve enterprise quality
Improved human capital: education and training and better health care
- Capital goods 是________________________
Capital goods goods - used as part of the production process, such as machinery or factory buildings
是个output，但是是用来继续制造别的东西
- Consumer goods是________________________
Consumer goods - goods produced for present use
是个output。但是是用来消费的东西
- 花钱消费consumer goods的过程就是_____________，花钱消费capital good的过程叫_________
花钱消费consumer goods的过程就是___consumption__________，花钱消费capital good的过程叫___investment______
- Investment减少，就是__________减少，对PPC的影响是_______和_______
Investment减少，就是______capital goods____减少，对PPC的影响是___shift in____和____movement （less capital goods）___
- 一个Economy的PPC，x轴和y轴是什么______
capital goods, consumer goods
- 一个Economy的PPC，shows_________________________
maximum combination of capital goods and consumer goods an economy can produce, using all of its fop
- PPC的外移只能由________________________________带来
fop quality or quantity improves
- 在PPC上，_____________________用光了
fop
多生产capital goods的“意想不到的好处”
Higher investment leads to the production of more capital goods.
- 预想之中的：movement along PPC
- 预想之外的：PPC还会外移
As society increases its stock of capital goods, the productive capacity of the economy increases, and the PPC moves outwards: this may be termed ‘long-run economic growth’.
why an outward shift of PPC is good
- an outward shift of the PPC is caused by an Increase in fop quantity or an Increase in fop quality (technological advance and higher productivity)
- An outward shift means the economy can produce more in the long run. This is an improvement in efficiency and international competitiveness.
- This means people can consume more goods to satisfy their wants and needs. They enjoy a higher living standard
- Primary sector 是___________, 2nd sector is ____________, tertiary sector is __________
agricultural; manufacturing; services
- Sector: 橙子汁是______；种橙子是________；卖橙子是___________
2nd;
primary;
tertiary
- PPC downward sloping的原因是___________________
Scarcity
- PPC 的movement，从一个点，move到另外一个点，代表了___________________
OC
- Output是________________, output per worker hour是__________________
production
productitivty
- 如果PPC是牛奶和电脑，现在生产电脑的技术进步，PPC怎么走，画出来
- human capital 是什么，可以用什么东西提高
human capital 是labour quality。
可以用什么东西提高: education, training, better health and nutrition
- investment增加的影响
investment ➪ capital ↑ ➪
PPC：1. movement，more capital goods.
2.capital is fop, higher capital, means PPC can shift out
Economic goods definition
Economic good - Goods which have an opportunity cost and suffer from the problem of scarcity. E.g. goods and services in our daily life
human capital近义词 （也就是）
labour productivity OR labour quality
how to improve human capital
training and education. Better health and nutrition
is $100 notes capital
No. $100 is Financial capital – 买physical capital的这个💰
“higher expenditure on capital goods” 的这个过程就叫做
investment
straight PPC means
PPC形状直线向下 = constant OC
每多一个x的商品，牺牲的y的数量是固定的
concave PPC means
concave (弯弯的口朝下) = increasing OC
那就是随着x的生产数量一直增加，每多一个x的商品，需要牺牲的y越来越多，也就是x的opportunity cost在随着生产数量增加(increasing opportuntiy cost
how to have long term economic growth
- Increase in quantity of fop
- Increase in quality (technological advance and higher productivity)
what does it mean when a country produces on its PPC
resources (fop) are fully utilised
If production is within PPC: underutilization of fop
If production is on PPC: full use of fop
If production is outside of PPC: unobtainable
movement along PPC tells us about
information regarding OC.
从A到B，多生产的consumer goods，其OC就是牺牲掉的capital goods，牺牲数量为C-D之间的距离
difference between production and productivity
production refers to the amount of output produced in a period of time
productivity refers to the amount of output produced BY a factor of production in a period of time
higher expenditure on capital goods EVALUATE pros and cons
- higher expenditure on capital goods means investment increases,
- more resources are being allocated to the production of producer goods SUCH AS machinery and tools
- Therefore there will be a movement towards more producer goods, if the country produces on its PPC
- At the same time, this means that less resources are being allocated to the production of consumer goods.
- Therefore in the short run, produces will benefit from more capital, whereas consumers will suffer from less consumption hence a lower standard of living
- However, in the long run, the economy enjoys a greater amount of capital. Also, the productivity of capital may also improve. This enhances a country’s productive capital so that the PPC curve shifts outwards, benefitting both consumers and producers.
However, it also depends on
- whether resources are fully utilised. If a country is producing within its PPC, then greater investment does not come at the cost of less consumption.
- the amount of capital goods a country already has. For example, if a country is already allocating a lot of resources on capital goods, the returns of more investment will be very low. The opportunity cost of producing extra capital goods will be sacrificing a lot of consumer goods. Consumers may have difficulties even feeding themselves and there may be famines, both the quantity and quality of labour will decrease, harming growth potential instead.
- whether investment is effective. Investment can be unsuccessful if the technology is still immature; alternatively, there may be corruption. If there is a lot of corruption and administrative costs, then higher expenditure on capital goods will not lead to more capital goods. This will be a waste of resources instead.
free goods definition
Free goods – not scarce, abundant,
- Free goods do not have OC
- Example: seawater, air
