Heterodox and Neoclassical
Which economic approach is focused on control and who has the power in an economy?
What is the heterodox approach?
Rain can make 10 hats and 20 stuffed animals, while Red can make 10 hats and 10 stuffed animals. Determine absolute advantage.
What is Rain has absolute advantage in stuffed animals.
The law of demand states that as prices increase, quantity demanded does this.
This occurs due to a change in the potential customer pool?
What is a shift due to population change?
If both supply and demand shift right, what occurs to P* and Q*
The people own the inputs, make the good and service, then controls the profit.
What is communism?
Rain makes 10 hats or 20 stuffed animals in one week. Determine their intercept for stuffed animals on the PPF.
What is 20 stuffed animals?
What is y-axis or price level?
An increase in production cost due to a minimum wage increase causes this to occur.
What is a suppl curve shift left? (due to input price increase)
If wages drop across the economy, what will occur for bus passes, an inferior good?
Demand will shift right, causing an increase in price and quantity demanded.
In this type of economy, the government controls the inputs and the profits, but the people make the good.
What is state capitalms?
These are the three common arguments against trade. (2/3 for full points).
What is domestic job loss, downward wage pressure and pressure on new industries from existing foreign producers?
These are the two key assumptions economists use for a market's supply and demand curve.
All goods are perfectly competitive and identical to consumers.
This shift occurs after a change in price of a good consumers tend to purchase with the focal good.
What is a shift in demand due to change in complement's price?
If before trade, Rain consumes 5 hats and 10 stuffed animals and Red consumes 5 hats and 5 stuffed animals.
After trade, Rain makes 20 stuffed animals, trade 10 for 5 hats, what is the gain from trade for them both?
What is no change in hats, gain in stuffed animals?
Explaination: Rain makes 20 stuffed animals, keeps 10, gains 5 hats. Same outcome. Red makes 10 hats, keeps 5, gains 10 stuffed animals. Gains 5 stuffed animals.
Economists use this limit to determine what to produce, how much of it, and how it aught to be distributed.
What are resources?
These are the common tools used to regulate trade. (2/3 for full points)
What are tarrifs, quotas and substities for domestic producers?
This point is where a supplier's willingness to produce a good meets the consumer's willingness to purchase at a given price and quantity demanded.
What is equilibrium?
This type of shift focuses on a change in resource distribution today based on anticipated events.
What is change in expectation? (Both supply and demand)
Red gives up 1 stuffed animal for every hat made, while Rain gives up 1/2 a stuffed animal for every hat made. Determine C/A in both goods.
Neoclassical economiesare defined by these three questions.
Who owns the resources, Who makes them, Who controls the profits?
This action made by 2 producers on a PPF allows for production and consumption outside of their original PPFs.
What is specialization
Price does not measure the literal price of a good, but this concept.
What is the current level of inflation, AKA price level
?
These two types of goods are only relevant when income shifts.
What are normal and inferior goods?
Both consumers and producers anticipate a decrease in prices in the future. Describe the change in price and quantity demanded.
Decrease in price, uncertain change in quantity.
Explaination:
Producers want to sell prior to decrease, so increase production today. Shift right, increase in quantity and decrease in price.
Consumers want to wait today for the lower price. Shift left, decrease in price and decrease in quantity demanded.