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Unit 1 and 2: Prosperity, inequality, and planetary limits; Technology and incentives Flashcards

(17 cards)

1
Q

GDP

A

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

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2
Q

GDP per capita

A

GDP/population
- measures average income or ‘living standards

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3
Q

Limitations of GDP per capita

A

Exlcudes:
- quality of our social and physical environment
- free time
- goods/services w/i the household
- costs on environment not recognised

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4
Q

Industrial Revolution

A

~ 1760-1850
- responsible for the kink in the hocke stick

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5
Q

Main ideas behind the Malthusian Model

A
  • 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
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6
Q

Capitalism

A

Economic system characterised by private property, markets, firms

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7
Q

Net benefit

A

Benefit - Cost

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8
Q

Opportunity cost

A

Benefits of the next best alternative - direct costs of the next best alternative

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9
Q

Economic cost

A

direct costs of action chosen + opportunity cost
- ‘take the action if the benefit is greater than the economic cost’

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10
Q

Economic rent

A

Nete benefit from option taken - opportunity cost (ie net benefit from next best option)
- innovation rent is a type of economic rent

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11
Q

Innovation rent

A

profit from using new tech - profits of continuing to use the same tech as competitors

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12
Q

Specialising

A

allocating people to a specific task/area with the lowest opportunity cost

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13
Q

Comparative advantage hack

A
  • cross multiply table
  • highest number = who has CA in each
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14
Q

Absolute advantage

A

ability to make more goods than another producer with the same amount of resources

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15
Q

Comparative advantage

A

ability to make a good at a lower opportunity cost than another

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16
Q

Deciding on terms of trade

A

should be any number between the opportunity cost for that specific item

17
Q

Technology costs - isocost line

A

Cost = (wage x workers) + (price of a tonne of coal x # of tonnes)