20th+

3) Adam Smith concluded that division of labor made countries wealthy.
a. Analogy: one pizza takes few people to be created. One prepares ingredients, another puts it in the oven, another one puts it in the box. This division makes each worker more productive, since each one is focused on a thing they do best and they don't need to spend time switching between the tasks.
b. Without specializations, if you want something - you have to make it yourself.
c. So if you are good at producing something - specialize at it and then trade with others.

4) Production Possibilities Frontier (PPF) shows different combinations of two goods being produced using all resources efficiently.
a. Every possible combination inside the curve is inefficient. On the curve - efficient. Outside - impossible.
b. The country that can produce more goods of one kind (per time) than another country is having an absolute advantage over another country in production of those goods.
c. Opportunity cost is a cost of production of good, measured in losses in production of another good.
d. Country that can produce good with cheaper opportunity cost, has comparative advantage over another country.
e. Individuals and countries should specialize in producing things in which they have a comparative advantage and then trade with other countries that specialize in something else. This trade is mutually beneficial.

5) If there is one point where economists agree it's that specialization and trade makes the world better off.

6) Self-sufficiency is inefficiency

3 - Economic Systems, Macroeconomics

.Economic Systems and Macroeconomics - CrCo > .

Extremes of Economic Systems - Communism vs Laissez-Faire Capitalism - EcEx > .

Public Goods and Externalities - PrDaEx > .

22-10-28 How China Is Helping to Reduce Inflation - Patrick Boyle > .

22-2-9 Why has Capitalism failed in Russia? - VisPol > . skip ad > .

'79-'90 Margaret Thatcher's Monetarism - Learning > .

> Capitalism >>

> > Econopolitics > >

Economics - CrCo >> .

Economics - Primer >> .

Economics - PrDaEx >> .

● Economic Principles ..

Economic Recessions and Recoveries ..

Energy as Currency ..

Inflation ..

Mid-COVID Inflation - 2021 →

MMT - Modern Monetary Theory ..

Monetarism ..

Ordoliberalism (Wirtschaftswunder) ..

Recession, Depression ..

Stimulus Impacts ..

1) As a social order, we have to figure out three things:
- What will we produce?
- How to produce it?
- Who will get it?

2) Two different economic systems: market economies and planned economies.
a. In planned economy, government controls labor, land and capital.
b. Communism is primarily defined by the lack of private property. Class-lessness is a symptom of having no private property. There are no communist countries in the world.
c. Often socialism has some private property and some public ownership.
d. Command economy is totally controlled by government.
f. In market economies, individuals control production to get profit.
Invisible hand - the unintended social benefits resulting from individual actions.
"It's not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from the regard to their own interest."
The mechanism of the invisible hand is that if you produce unwanted or shoddy products, a competitor will produce better more desirable products and put you out of business. This results in businesses that produce the things that people want/demand most, at lower prices.

3) Modern economies are neither completely free market nor planned. There's a spectrum of government involvement.

4) Circular flow model.
a. Modern economy is made above households (individuals like him and you) and businesses.
b. Businesses sell goods and services to households in product market.
c. Households earn the money by selling labor to businesses.
d. Businesses pay for the resources on resource market.
f. Government also buys products and resources, i.e. to buy cars from businesses and hire policemen to drive them.
e. Government gets the money from taxes, households and businesses (and borrowing).

4 - Supply and Demand

.Supply and Demand - CrCo > .

Simulating Supply and Demand - Primer > .

Public Goods and Externalities - PrDaEx > .

22-2-4 How to Read the Jobs Report | WSJ > .
Economics - Primer >> .

Economics - CrCo >> .

Supply Chain Problems - CoRo >> .

Economics - PrDaEx >> .

● Economic Principles ..

Economic Recessions and Recoveries ..

Energy as Currency ..

Inflation ..

Mid-COVID Inflation - 2021 →

MMT - Modern Monetary Theory ..

Monetarism ..

Ordoliberalism (Wirtschaftswunder) ..

Recession, Depression ..

Stimulus Impacts ..

Supply and Demand ↠

1) Market - any place where buyers and sellers meet to exchange goods and services.
a. An owner of a supermarket values the labor of the cashier more than money she pays him.

2) Price signals - the information that markets generate to guide the distribution of the resources.
a. Businesses, and in particular large corporations , are often villainized as greedy, heartless institutions, that take advantage of consumers, but if markets are transparent and buyers are free to choose, then businesses will have a hard time making advantage of people.

3) Supply and demand.
a. When the price goes up - people buy less, when the price goes down - people buy more.
b.When the price goes up - the farmer wants to produce more, when the price goes down - the farmer wants to produce less.
c. When quantity supplied = quantity demanded, we get equilibrium price of product.

4) Four market behaviors
a. Supply can decrease.
b. Supply can increase.
c. Demand can increase.
d. Demand can decrease.

Pages

Monday, April 30, 2012

● Economics Course

Sunday, April 29, 2012

Economics

2 - Specialization and Trade

3 - Economic Systems, Macroeconomics

4 - Supply and Demand

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