Intro to Economics
Which term refers to the science which studies human behavior as a relationship between ends and scarce means?
Economics
What are at least three different jobs that contribute to the making of a pencil?
Woodcutters
Miners
Factory workers
Shippers
Scientists
What is at least one example of a spontaneous order?
language, finance, trade, etc.
What are incentives?
rewards or punishments that motivate behavior
What are the two main kinds/institutions of property?
Common property and private property rights
Who rejected a letter from his brother asking for $80 because he didn't want to continue incentivizing his brother's poor decision-making?
Abraham Lincoln
What does the "hockey stick of human prosperity" graph show us?
Wealth (per capita GDP) has increased dramatically across the world in the last 200 years.
According to Socrates, who is the wisest man?
The wisest man is the man who knows that he knows nothing.
What is a Deliberate Order?
An order that aims to create a specific end result or pattern. It has a central planner.
How did Britain solve the issue of too many prisoner dying on the long journey to settle Australia?
Ship captains would now only be paid based on the number of prisoners that survived the journey.
What term refers to the humanly devised constraints that structure political, economic, and social interaction?
Institutions
In most of Africa, why have populations of elephants and rhinos continued to decline, despite it being illegal to own, hunt, or sell body parts of endangered species?
Poachers continue to hunt them illegally.
Who was Adam Smith?
The father of modern economics and capitalism.
Why did the essay claim that the making of a pencil is a "wonder"?
Despite seeming simple, no one single person has all of the knowledge to make a pencil.
What is a Spontaneous Order?
An order that creates a pattern without the actors intending to create that pattern. It arises from the “voluntary cooperation” of many different people.
What happened when the state of Georgia put bounties on wild hogs in an attempt to reduce the population?
They started catching and breeding feral pigs to collect unlimited bounties.
What does the "tragedy of the commons" refer to?
The idea that if everyone owns something, no one really does.
How did Zimbabwe find success in increasing the population of elephants/rhinos?
They made it legal to privately own, sell, and hunt them, which gave people an economic incentive to breed them.
What does the "Invisible Hand" refer to?
A metaphor for the unseen forces that guide economies. It shows us that individuals' pursuit of personal gain inadvertently promotes the public good.
How do any pencils exist despite not having a central planner for the entire process of pencil-making?
They exist because of voluntary cooperation and trade. Everyone in the process benefits by trading with each other.
Why do do deliberate orders only work for small groups?
Complexity makes deliberate order impossible
No one person has enough knowledge to run the whole economy
During the building of the transcontinental railroad in the 1860s, what happened when the government started paying the railroad companies based on miles of track constructed?
The companies started curving their railroad routes to collect more money from the government.
Why does the number of trees/forests keep increasing each year in the US despite a large logging industry?
Forests used for lumber are mostly owned privately, so the logging companies have an incentive to plant more trees than they cut down.
How did the government welfare program created to help struggling single mothers end up incentivizing the breakup of families?
Poor women started divorcing their husbands to get access to the welfare money.