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ECON 200 > Exam 1 > Flashcards

Exam 1 Flashcards

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1
Q

branch of philosophy that deals with moral principles, values, and rules governing right and wrong behavior.

A

ethics

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2
Q

economy

A

ystem of production, distribution, and consumption of goods and services within a society or region.

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3
Q

Milgram Experiment

A

psychological study conducted by Stanley Milgram in the 1960s that tested obedience to authority. Participants were instructed to administer electric shocks to a “learner” (an actor) to see how far they would go, even when they believed they were harming another person.

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4
Q

The Challenger Explosion

A

1986 disaster in which NASA’s Space Shuttle Challenger exploded 73 seconds after liftoff due to a failure in the O-ring seals on its solid rocket boosters, resulting in the deaths of all seven crew members

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5
Q

The Great Enrichment

A

erm coined by economist Deirdre McCloskey to describe the unprecedented economic growth and rise in global prosperity that began in the 18th century, primarily due to innovation, entrepreneurship, and market liberalism.

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6
Q

Changes in Infant Mortality Rates

A

Refers to the historical decline in the number of infant deaths per 1,000 live births, largely due to advancements in medicine, hygiene, and public health.

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7
Q

Changes in Literacy Rates

A

The increase in the percentage of people who can read and write over time, often linked to improvements in education systems, printing technology, and economic development

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8
Q

Changes in Life Expectancy

A

The increase in the average number of years a person can expect to live, driven by medical advancements, improved sanitation, better nutrition, and reduced infant mortality.

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9
Q

Money

A

A medium of exchange used to facilitate trade, typically in the form of coins, banknotes, or digital currency.

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10
Q

trade

A

The exchange of goods and services between individuals, businesses, or countries, often leading to economic growth and specialization.

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11
Q

Market Liberalism

A

An economic philosophy that promotes free markets, minimal government intervention, and individual economic freedom as key drivers of prosperity.

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12
Q

Adam Smith

A

An 18th-century Scottish economist and philosopher known as the “father of modern economics.” His works, including The Wealth of Nations, laid the foundation for free-market capitalism.

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13
Q

Innovation

A

The process of developing new ideas, products, or methods that improve efficiency, solve problems, or create value.

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14
Q

Entrepreneurship

A

The act of starting and managing a business venture, often involving risk-taking, innovation, and the pursuit of profit.

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15
Q

Profit

A

The financial gain obtained when revenue exceeds costs in a business or economic activity

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16
Q

difference between entrepreneur and small business owner

A

entrepreneur is creating something brand new

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17
Q

Economic Interdependence

A

condition in which individuals, businesses, or nations rely on each other for goods, services, and resources. This occurs in modern economies due to trade and specialization.

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18
Q

Specialization

A

process by which individuals, businesses, or nations focus on producing a specific good or service in which they have an advantage, leading to increased efficiency and productivity.

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19
Q

Private Property

A

A legal right that allows individuals or businesses to own, control, and transfer assets, such as land, buildings, and intellectual property. It is a fundamental concept in market economies.

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20
Q

Currency

A

A medium of exchange issued by a government or central authority that facilitates trade, typically in the form of coins, paper money, or digital currency

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21
Q

Trade

A

The voluntary exchange of goods, services, or resources between individuals, businesses, or countries, often driven by comparative advantage.

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22
Q

Zero-Sum Game/Mentality

A

perspective that assumes one person’s gain comes at another’s loss, meaning total wealth or benefit is fixed. This contrasts with positive-sum situations, where all parties can benefit from economic growth and cooperation.

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23
Q

Trust

A

social and economic concept referring to the confidence that individuals or institutions will act reliably, ethically, and as expected in agreements, transactions, or relationships.

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24
Q

Land

A

factor of production that includes all natural resources, such as minerals, forests, water, and agricultural space, used to produce goods and services.

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25
Labor
human effort—physical or intellectual—used in the production of goods and services
26
Capital
man-made resources used in production, such as machinery, tools, buildings, and financial assets, which help increase productivity and economic output.
27
Tangible resources:
physical assets such as land, machinery, raw materials, and money
28
Intangible resources
Non-physical assets such as patents, trademarks, brand reputation, knowledge, and human capital
29
Opportunity Cost
The value of the next best alternative foregone when making a decision. It represents the cost of choosing one option over another.
30
Transaction Cost
The costs associated with making an economic exchange
31
Institutions
The formal and informal rules, norms, and structures that govern social, political, and economic interactions. Institutions include laws, governments, markets, and cultural traditions.
32
Expectations
Beliefs or forecasts about future events, behaviors, or outcomes that influence decision-making in economics, politics, and society. Expectations shape consumer behavior, investment decisions, and policy-making.
33
Incentives
Rewards or penalties that influence individual or collective behavior. Economic incentives include wages, taxes, and subsidies, while social incentives involve reputation, status, or peer pressure
34
Why Do Institutions Emerge?
Institutions emerge to reduce uncertainty, establish order, and facilitate cooperation in societies. They help enforce contracts, protect property rights, manage resources, and resolve conflicts, making economic and social interactions more predictable and efficient.
35
Feudalism
A medieval economic and social system in which land was owned by lords, worked by peasants (serfs), and governed through a hierarchy of obligations. Lords provided protection in exchange for labor or military service, and the system relied on localized authority rather than centralized state control.
36
Mercantilism
An economic theory and system (16th–18th centuries) that emphasized state control of trade, accumulation of wealth (especially gold and silver), and a favorable balance of trade. It promoted colonial expansion, tariffs, and government intervention to strengthen national economies.
37
Capitalism
economic system based on private ownership of the means of production, market competition, and the pursuit of profit. Prices, production, and distribution are largely determined by supply and demand rather than government control
38
Socialism
conomic and political system in which the means of production (such as factories and resources) are collectively owned or controlled by the state or society. Socialism emphasizes wealth redistribution, economic equality, and state involvement in key industries
39
Welfare Capitalism
orm of capitalism in which the government provides social welfare programs (such as healthcare, education, and unemployment benefits) to reduce economic inequality while maintaining a largely market-based economy. Examples include the Nordic model and social democracies.
40
Objective Value
inherent worth of a good or service based on measurable factors such as production costs, labor, and materials, rather than personal preferences or market fluctuations. Some economic theories, like the labor theory of value, emphasize objective value.
41
Market Value
price at which a good or service is bought and sold in the marketplace, determined by supply and demand. Market value fluctuates based on consumer preferences, competition, and external factors.
42
Surplus Value
concept from Marxist economics referring to the difference between the value of goods produced by labor and the wages paid to workers. According to Karl Marx, capitalists extract surplus value as profit.
43
Marginal Value
additional value or benefit gained from consuming or producing one more unit of a good or service. It helps determine how much a consumer is willing to pay for an extra unit or how much a producer benefits from increased production.
44
Marginal Cost
The additional cost incurred by producing one more unit of a good or service. It helps businesses decide how much to produce, as production continues until marginal cost equals marginal revenue.
45
Utility
A measure of the satisfaction, happiness, or benefit a person derives from consuming a good or service. It is a fundamental concept in economics that helps explain consumer choices.
46
law of diminishing marginal utility
An economic principle stating that as a person consumes more units of a good or service, the additional satisfaction (marginal utility) derived from each extra unit decreases. For example, the first slice of pizza may provide great satisfaction, but by the fourth or fifth slice, the enjoyment diminishes.
47
An intellectual movement in 18th-century Scotland that emphasized reason, empiricism, and progress in philosophy, economics, and science. Key figures included Adam Smith, David Hume, and Francis Hutcheson.
scottish enlighenment
48
A concept from Adam Smith's The Theory of Moral Sentiments, referring to an internalized, unbiased observer that helps individuals judge their own actions and develop moral sensibilities.
The Impartial Spectator
49
Adam Smith’s 1759 work that explores human morality, arguing that our ethical decisions are shaped by sympathy and the judgment of the impartial spectator.
theory of moral sentiments
50
An economic principle from The Wealth of Nations, where Adam Smith illustrates how breaking production into specialized tasks (as in a pin factory) increases efficiency and output.
division of labor (pin factory)
51
Adam Smith’s 1776 book, foundational to modern economics, advocating free markets, competition, and minimal government intervention in the economy.
wealth of nations
52
A metaphor from The Wealth of Nations describing how individuals pursuing their self-interest unintentionally contribute to economic prosperity
invisible hand
53
The British government granted the East India Company exclusive rights to trade with India, leading to vast economic and political power but also corruption and inefficiency.
India company monopoly
54
Policies that favor specific companies or industries, sometimes through subsidies, bailouts, or regulations.
pro bsuiness
55
olicies that encourage competition and free markets, ensuring efficiency and consumer benefits.
pro market
56
Refers to both the Scottish Enlightenment and the broader European Enlightenment, emphasizing reason, individual rights, and scientific progress.
the enlightenments
57
The ability of a person, firm, or country to produce more of a good using the same amount of resources compared to others.
absolute advantage
58
A period (1750–1850) marked by the transition to mechanized production, steam engines, and urbanization, significantly increasing productivity.
first industrial revolution
59
During the Industrial Revolution, urbanization led to...
overcrowded housing, poor sanitation, child labor, and long working hours in unsafe factories.
60
British tariffs on imported grain (1815–1846) that protected domestic farmers but raised food prices, benefiting landowners at the expense of consumers.
CORN LAWS
61
German philosopher (1818–1883), co-author of The Communist Manifesto, who developed a critique of capitalism and proposed communism as an alternative.
karl marx
62
A theory of historical materialism, arguing that class struggle drives social change, with capitalism inevitably leading to socialism.
Marx theory of history
63
Marx’s idea that the value of a good is determined by the amount of labor required to produce it, rather than supply and demand.
Marx theory of value
64
A late 19th- and early 20th-century period marked by advancements in steel, chemicals, electricity, and mass production.
second industrial revolution
65
Why Didn’t the Proletariat Rebel?
rising wages, improved living conditions, and social reforms
66
Leader of the Bolsheviks and key figure in the Russian Revolution, he adapted Marxism into Leninism, emphasizing a vanguard party to lead the revolution.
vladimir lenin
67
The 1917 overthrow of Russia’s provisional government by Lenin’s Bolsheviks, leading to the establishment of a communist state.
bolshevik revolution
68
An economic system where the government controls production, distribution, and prices, often associated with the Soviet Union.
Command Economy (State-Directed Socialism)
69
A man-made famine (1932–1933) in Soviet Ukraine, caused by Stalin’s policies, leading to millions of deaths.
Holodomor
70
An economic policy of self-sufficiency, avoiding reliance on international trade.
Autarky
71
A geopolitical conflict (1947–1991) between the US-led capitalist bloc and the Soviet-led communist bloc, marked by proxy wars, arms races, and ideological struggles.
cold war
72
A curve showing the maximum possible output combinations of two goods given limited resources and technology.
Production Possibilities Frontier
73
Occurs when a change in resources or technology disproportionately affects one sector, altering the curve’s shape
pivot in ppf
74
Happens when there is a general increase or decrease in resources or productivity, moving the entire frontier outward or inward.
shift in ppf
75
The fundamental economic problem of having limited resources to satisfy unlimited wants.
scarcity
76
The principle that as production shifts from one good to another, the opportunity cost increases due to resource specialization.
Increasing Opportunity Cost
77
An economy is efficient if it is producing where on ppf
on the line
78
Economic growth, through more resources or better technology, expands production capacity, shifting the PPF...
outward
79
A 19th-century French economist and writer who defended free markets and criticized government intervention.
Frederic Bastiat
80
Bastiat’s idea that good economic analysis considers both immediate effects and unintended consequences
seen vs unseen
81
The mistaken belief that destruction (e.g., breaking a window) stimulates the economy by creating work, ignoring that resources could have been used elsewhere.
broken windows fallacy
82
bastiat argued that economic policies should prioritize
consumer benefits
83
Do Natural Disasters Make Us Better Off?
A critique of the idea that rebuilding after disasters boosts the economy, as destruction merely reallocates resources instead of creating new wealth.
84
Laws that prohibit harm (e.g., theft, fraud) rather than forcing individuals to act in a certain way.
negative law
85
Bastiat’s term for government policies that take from one group to benefit another (e.g., subsidies, tariffs)
legalized plunder
86
Government programs that claim to help the poor but create dependency or inefficiency.
false philanthropy
87
Bastiat argued that society functions through voluntary cooperation, while government should have limited, defined roles.
The Distinction Between Government and Society
88
A satirical essay by Bastiat mocking protectionism, where candlemakers demand the government block sunlight to increase demand for candle
the candlemakers petition
89
Bastiat argued that individuals spending their own money wisely is more efficient than ...
government redistribution

ECON 200 (4 decks)

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