Unit 1 and 2: Prosperity, inequality, and planetary limits; Technology and incentives Flashcards
(17 cards)
GDP
measure of the market value of the output of final goods/services in the economy in a given period
- production approach
- expenditure approach
- income approach
GDP per capita
GDP/population
- measures average income or ‘living standards
Limitations of GDP per capita
Exlcudes:
- quality of our social and physical environment
- free time
- goods/services w/i the household
- costs on environment not recognised
Industrial Revolution
~ 1760-1850
- responsible for the kink in the hocke stick
Main ideas behind the Malthusian Model
- APL diminishes when population rises, as land quantity is fixed
- population expands if APL increases, due to higher living standards
- population stas the same when APL is at subsistence level
Capitalism
Economic system characterised by private property, markets, firms
Net benefit
Benefit - Cost
Opportunity cost
Benefits of the next best alternative - direct costs of the next best alternative
Economic cost
direct costs of action chosen + opportunity cost
- ‘take the action if the benefit is greater than the economic cost’
Economic rent
Nete benefit from option taken - opportunity cost (ie net benefit from next best option)
- innovation rent is a type of economic rent
Innovation rent
profit from using new tech - profits of continuing to use the same tech as competitors
Specialising
allocating people to a specific task/area with the lowest opportunity cost
Comparative advantage hack
- cross multiply table
- highest number = who has CA in each
Absolute advantage
ability to make more goods than another producer with the same amount of resources
Comparative advantage
ability to make a good at a lower opportunity cost than another
Deciding on terms of trade
should be any number between the opportunity cost for that specific item
Technology costs - isocost line
Cost = (wage x workers) + (price of a tonne of coal x # of tonnes)
