Unit 3 Flashcards
BEFORE 1776
- Mercantilism
- Gold and silver
- More on export than import
- The colonial models
- The birth of classical economics
- Wealth of the Nations – 1776
ADAM SMITH
Smith introduced that if a person followed their own _______, they would be serving the common good.
self-interests
“The _________ is not based on accumulation of gold and silver but on the value of good and services”
wealth of the nations
To increase the wealth one of the key is worker productivity (Division of labor and Specialization of Labor)
TRANSFORMATIONAL THOUGHT
cost of production
Labor theory value
o Consumer maximize utility
o Producers maximize their profits
Invisible hand
It means happiness
utility
______ is key to the prosperity of nations
Free trade
British economist, __________ expanded on Smith’s idea by introducing the theory of comparative advantage
David Ricardo
“When both countries concentrate on producing what they are best at and then trade, everyone benefits.”
theory of comparative advantage
Comparative advantage, both countries have opportunity costs. But the country who has a __________ has the comparative advantage.
lower opportunity cost
the foundation of modern
international trade
theory of comparative advantage
When almost all scholar are peaching ideas like private property and free-trade and free-market, along comes the __________ in 1848.
Communist Manifesto
Communist Manifesto was created by?
KARL MARX AND FRIEDRICH ENGELS
“Rather than investigating individual behavior observed economic classes and argued that history can be explained by the struggle between workers and property owners”.
Communist Manifesto
KARL MARX AND FRIEDRICH ENGELS
In spite of Marx’s criticisms, ________ theory dominated economic thinking until the end of 19th century, with influences from American, British, and French economists.
market-based
Broke from classical economist because the economy shifted focus from supply and demand side of the economy.
NEOCLASSICAL ECONOMICS
In neoclassical economics, the _______ of the product is not the main issue
value
NEOCLASSICAL ECONOMICS
“rather than the value of good being derived from the cost of value is derived from the _____ of consumer of the product”
utility
Measuring the utility in economics
the law of diminishing marginal utility
Mathematics began to emerge in economics
NEOCLASSICAL ECONOMICS
Wrote the “Principle of economics” 1890
ALFRED MARSHALL
Advent of the supply and demand diagram and the beginning of models to explain human behavior.
ALFRED MARSHALL