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mp The main concern of economics is what we do with our materials, and how that
mp Àeople think of the Garden of Eden, when they think of a true economy, but that
mp Jome countries have many resources but make terrible decisions, which lead to
terrible consequences, and as a result, they end up having a low standard of living.
Other countries with low resources make beneficial decisions, which lead to a
mp xapan, for example, does not have a lot of natural resources but it¶s economy is
better than Argentina which is very poor but has a lot of natural resources.2
mp Àeople think that economics is just about how to make money or predict the stock
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alternative resources.4
American from an earlier time-period could want, but they are seen as ³just
getting by.´ 4
mp There are unmet needs in every country no matter how rich they are.4
mp One key to a successful economy is allocating resources. The UJJ used more
mp oney is the resource we use to eat, sleep, and live, but it is not what makes us
rich. ët has no value in and of itself. ët is the volume of goods that we are able to
mp Economics is a very specific science when one thing happens another thing will
mp Àeople on both sides of the aisle use similar methods even though they have very
different ideas.6
mp Economics has been around for a long time, and its principles have been built
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p ët is not a zero sum situation if both sides don¶t benefit from trading.9
mp Through NAFTA, unemployment went down in the UJ, Canada, AND exico. ët
was thought people would move to exico, because of exico having lower
wages, 9 that didn¶t happen because all the countries in the NAFTA agreement
mp any people think that it is favorable to be exporting too much and less favorable
to be importing too much.10 This is not true, the benefits of international trade are
in the goods and services a countries receives through trade, not how wealthy it
becomes.11
mp Aith tariffs there is a lower amount of imports and exports, through countries
putting a tax on foreign goods to protect domestic goods. This does not help a
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mp Absolute advantage
p This is when a country can make or grow a product at the cheapest price
and has the best climate or circumstance for providing that product. Ahen
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mp Comparative advantage
just sofas. ët loses less pillows than Country A, therefore, Country ^ has
the comparative advantage. The products that Country ^ sell are relatively
mp Economies of Jale
p Jome countries like the UJ can have a specialized workforce, make and
invest the machinery needed and sell enough of their product, because
they have enough people willing to buy their product to make it affordable
p Other countries like the Australia are as wealthy but don¶t have enough
people to make their product just available to the people of there country.
They end up producing their product in other countries and selling their
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product. The UJ has higher wages then ëndia, but it can make more
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make more products in a shorter period of time and so the labor costs are
p Also, capital and resources are more abundant in a country with higher
p Javing xobs
p Tariffs do not help, when foreign products have to pay a tariff to supply
steel to a country the steel corporations end up making money and saving
jobs, however when they have to compete in the markets they end up
p ënfant ëndustries
until they can compete in the world market. The problem is that older
industries have more support because they have been through more,
whereas a new industry has only the government and tax dollars to help it
stand. 18
p National Defense
with because they are afraid that they might be providing weapons that
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p ³Dumping´
that are lower than the production costs in that country. any times this is
p Tariffs can be seen it two ways if a foreign product has a tariff the domestic
product can lift the price up by the charge of the tariff 21 or if it¶s a quota the
politician can lie and say it was a tariff that drove the price up.22 All countries end
up with ³unfair´ tariffs to protect themselves. 22 Also, for perishable it can take so
long to get through customs that companies decide it¶s not worth it. 22
making computer parts.24 Even though Americans lose jobs, American companies
can now sell more computers and with that wealth create more jobs.23
mp Each person sees the exchange of his knowledge for goods and services.24
government does because they will think that the government is all-powerful.26
mp Free people can do amazing things in a free society when they are not held back
by government..27
p Central government 28
p Àeople are given extra knowledge to join their plans with their friends.29
p Experts29
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mp Ae can also gain knowledge from common people who have experienced
mp The central government can only look at statistics to see what needs to be done
next. They cannot see or adjust to the little changes that are always happening.32
mp ëndividual people are able to make adjustments to changes as they see them.32
sometimes without knowing what the original problem was, through the price
system.33
c
there is no one to tell the little people what to do. Choices are made through
prices.34
mp Great ^ritain cannot produce enough food to feed its country, but through price
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mp Àrices determine how much of a resource goes where, and how the products
mp any people think that high prices are unfair, but this is not the case, high prices
convey how scarce an item is and the fact that many people want it.37
advance without having to even know how the problem came to be. 37
mp Àrices guide producers and consumers by providing incentives to affect their use
of resources and products. Àroducers don¶t know what consumers want, but they
know what sells and they know to sell off and fix what doesn¶t sell.38
mp Àrices tell producers what works and what doesn¶t and an incentive to stop using
what doesn¶t. This means that resources are used more efficiently. 38
mp Àrices connect you with any country in the world that operates under a price
system. 39
mp A price system lets you get how much of something you want, and lets them
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mp High demand allows producers to raise the price and produce more of an item and
draw resources away from other items to produce that item. {ow demand requires
mp During, the era of the Joviet Union the government tried to make all the decisions
for the economy. They had a surplus of moleskins, which only some people
wanted, that were rotting in their warehouse, while that had millions of starving
c
mp Àroducers are not greedy, if they were greedy they wouldn¶t make any money
because the consumer would from a cheaper producer and that producer would
p ëf the demand in one product goes up, the producers who also use an
ingredient in that product will pay higher prices for those products. The
producer will only buy enough of a product to cover the higher costs.43
mp ëncremental Jubstitution
p Ahen there is price competition, producers will only use what they need
another item. 45
mp Economic Jystems
p The amount of resources that are used should depend on how much is
really needed not how much people convince you should need. 46
p Àroducers are just guided by how much they can sell a product for and
how much it costs to produce a product, and consumers just have to worry
p ën a capitalist society people demand to get paid and so they can only
make a certain number of mistakes before they do not have the money to
society leaders stay in power and end up wasting many resources in the
process.48
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mp There is not a ³fixed´ supply of any good. There will be more of it when it is
economically feasible to supply and the demand is high and less of it when the
mp esources get the best use when they are directed at products people want.50
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p Àroducers do not have much choice about what price is charged, because
change.51
mp Competition forces production, and prices to move where there is the highest
return. 52
mp ³ eal Value´
p ³ eal´ values don¶t exist, the only reason people trade is that the value of
one thing is worth more to them then what they currently own. ëf
people traded and one was objectively worth more value than the other
item, the other person would feel they were being cheated.53
c %
mp Àrice controls restrict the free market process of supply and demand.55
mp Àrice ceilings restrict the price from rising above a certain price.55
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supplied.56
mp A ³surplus´ happens when the amount demanded falls below the amount
supplied.56
population.57
p Àeople who don¶t need as big of an apartment are more likely to buy one
p Àeople who need one that size are going to be left in an apartment that is
p ent control also reduces the amount of apartments built. They can be
p Aith rent control new apartments eventually need to be built and the only way
to do this is to exempt them from rent control. This means that luxury homes
under rent control become cheaper than homes without rent control.60
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when an item is too expensive and less people are willing to purchase it. There
is scarcity when there are fewer goods relative to what people want.62
p Aith price control there is no incentive to move goods to where there is a high
demand and move goods away from where there is low demand.63
mp ^lack arkets
p Aith price controls there are black markets where prices are higher than the
prices under price controls and under what they would be in the free market. 64
mp ]uality Deterioration
p Under price controls the quality of the apartment goes down when there is less
&
mp Aith price floors people starve because they can¶t afford the surpluses of food.66
mp There are subsidies from the item that go to the top farmers.67
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mp Aith price floors poor people with little money spend too much money on goods
leaving little money towards other things that they need. Àeople with food stamps
mp Àoliticians will pay attention to an economist¶s advice so far as they still get
elected.68
mp The FD passed the Fair {abor Jtandards Act (F{JA). ët changed the work-age
requirements, the length of the workweek, pay rates for overtime work, and
mp This was particularly true for Àuerto ico, because their economy was already so
bad.71
mp The minimum wage went back down to 12.5 cents per hour.71
mp The question is not will it create unemployment, but by how much will
mp There are two sectors- a covered minimum wage and a sector that isn¶t covered by
the minimum wage. The covered sector transfer to the uncovered sector when
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uncovered sector.73
mp ët is worse for any worker to receive a higher wage, but lower non-pecuniary
benefits.74
mp Ahen low skill labor is too expensive companies replace them with machines.75
mp Aith minimum wage, employers do not have to hire by labor costs. They can hire
mp The minimum wage exceeds young people¶s work productivity, so that they don¶t
country.78
mp Unions support the minimum wage because it increases the wages of the non-
union workers so that union workers have less competition when looking for
jobs.79
mp ^usinesses also like the minimum wage because it forces competitors to pay
mp Aith the minimum wage people who are unemployed stop looking for work.
They choose to just receive the welfare check or turn to criminal activity.81
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mp ën the UJ the North profits more from the minimum wage because it is richer, the
Jouth on the other hand can¶t handle the minimum wage as well, and people are
mp Ahen the N A ended the Jouth was very competitive, because of price
differentials.76
mp A problem with the minimum wage law is that it tries to solve the poverty
mp The Colberg Hypothesis says that largely industrialized regions will always vote
for the minimum wage so that labor does not move away.84
p ën order to equalize the North and the Jouth, taxes would have to be
raised.85
p The visibility of the payments and what they would mean would make the
p Congress would not pass a lower minimum wage for teenagers. ët¶s been
unemployment.79
mp Education
p This is the best way to fix the problem. The politician will try to
disillusion voters, but if economists change their minds we won¶t have this
problem anymore.86
c *
mp The government sets up rules and contracts for parties when they transact. 87
mp The government also takes care of cost and benefits the market cannot take care
of.88
mp ët¶s good that the government is an enforcer of rules because that has helped
countries flourish.82
mp The cost of scarce resources is how they are not used with a corrupt government
mp Corruption can take place through appointing celebrities and relatives to office.90
mp The people who are in power should be trust worthy and not always changing
their minds.91
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mp Ahere people are given property rights they are most likely to produce good
products because if they do not produce good products they will lose money.94
mp ët is best when the rich buy large estates and sell off land to the poor. ën
California and Virginia95 where this does not happen the large estates become
mp The public and the legal system need to be honest for the economic system to run
smoothly.97
mp Ahen people are honest businesses can spend less money protecting their goods
mp Ahen the only way to avoid losing money is to disobey the law people lose
mp ën a free market honest people learn to avoid dishonest scams and the scam artists
mp External Costs: costs that are not involved in the cost of production101
mp The government can pass laws that protect people from the external costs.101
mp External ^enefits: ^enefits that are free with other people buying a product.102
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mp The president and other elected officials make decisions that would help them get
elected in the short term but would not help the country in the long term.104
mp The problem with dealing with issues categorically is that politicians are
mp Jometimes having a little of a bad thing can be a good thing, with a little
mp Àoliticians go back to old laws even after the conflicts that created those laws
have passed.108
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mp Ae want to take away the light of the Jun because he is the ultimate competition
to us. ëf we light our candles more often we will prosper from more labor being
mp ^y doing this we will help the consumer, but hurt the producer.
mp An orange from Àaris is more expensive than an orange from {isbon, because in
Àaris you have to pay for artificial light and for the orange in {isbon the light is
free.109
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