Econ 1020 Week 4 Notes Winter Quarter
Econ 1020 Week 4 Notes Winter Quarter ECON 1020
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This 3 page Class Notes was uploaded by Matthew Stein Oakley on Sunday January 31, 2016. The Class Notes belongs to ECON 1020 at University of Denver taught by Dr. Chiara Piovani in Winter 2016. Since its upload, it has received 7 views. For similar materials see Intro to Macroeconomics in Economcs at University of Denver.
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Date Created: 01/31/16
Adam Smith (18 century): Commercial capitalism o Manufactories: capitalists & workers o Traditional techniques of production Classical economics: o Adam Smith o David Ricardo o John Stuart Mill o Karl Marx Analysis of commercial capitalism: o Source of wealth = LABOR division of labor increase in productivity o Markets; self-interest social harmony Competition Markets are self-regulating Laissez-faire Government: Prevent market power 3 roles: o Defense o Justice o Public Goods Infrastructure Education 3 Social Classes: 1) Capitalists Profit a. Interest in market power to increase profit 2) Workers Wage a. Potential conflict between capitalists/workers b. Workers lack education and time 3) Landlords Rent a. Has a passive role From Adam Smith: Labor Theory of Value o (Labor is the source of wealth) Class conflict o Karl Marx – critical economics (Radicals) Laissez Faire (self-regulating markets) Self-interest social harmony o Traditional economics today Karl Marx: 2 common misconception of capitalism: Capital Exchange o Production Historical Materialism Base of Structure Superstructure Capitalism leads to: Dehumanization Alienation Exploitation Money Commodities Money’ Money’ – Money = Surplus Value (Profit) Outline Circular flow diagram; Demand: demand schedule, curve, and shift factors o Looks at the behavior of buyers Supply: supply schedule, curve, shift factors Quantity demanded of any good is the amount of the good that buyers are willing and able to purchase. Law of demand: the claim that quantity demanded of a good fails when the price of the good rises, other things equal Demand Schedule: a table that shows the relationship between the price of a good and the quantity demanded. Market Demand versus Individual demand: The quantity demanded in the market is the sum of the quantities demanded by all buyers at each price. The Demand Curve Shifters: The demand curve shows how price affects quantity demanded, others things being equal These “other things” are non-price determinants of demand (i.e. things that determine buyers’ demand for a good, other than the good’s price). Changes in them shift the D curve 1) # of buyers 2) Income a. Demand for a normal good is positively related to income. i. An increase in income causes increase in quantity demanded at each price, shifting the D curve to the right. ii.(Demand for an inferior good is negatively related to income. An increase in income shifts D curves for inferior goods to the left.)
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