Econ PDF - Economics Notes
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Notre Dame University
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Summary
This document provides an overview of economic principles, including scarcity, opportunity cost, and factors of production. It also discusses different economic systems like traditional, capitalism, socialism, and communism, along with key concepts in microeconomics.
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Tab 1 Synthesize Review Unit 1: Basics of Economics Key Principles: Economics: "Management of household" (Greek). Focuses on making choices with limited resources and unlimited wants (scarcity). Scarcity: Fundamental principle; applies to resources with multiple valuable uses. Op...
Tab 1 Synthesize Review Unit 1: Basics of Economics Key Principles: Economics: "Management of household" (Greek). Focuses on making choices with limited resources and unlimited wants (scarcity). Scarcity: Fundamental principle; applies to resources with multiple valuable uses. Opportunity Cost: What you give up to get something. "No free lunch" (Milton Friedman). Three Central Questions: 1. What to produce? 2. How to produce? 3. For whom to produce? Factors of Production (CELL): Capital: Tools, equipment (interest). Entrepreneurs: Innovators who take risks (profit). Labor: Workers’ skills (wages). Land: Natural resources (rent). Key Theories & People: Adam Smith ("Father of Economics"): ○ Division of Labor → Specialization increases efficiency. ○ Invisible Hand → Self-interest drives societal benefit. ○ Wealth of Nations: Links labor to national wealth. Comparative Advantage (David Ricardo): Focus on what you do best (lower opportunity cost). Absolute Advantage (Adam Smith): Produce more efficiently than others. Unit 2: Economic Systems Key Economic Systems: Traditional Economy: ○ Stable, predictable roles. ○ Low innovation, low living standards. Capitalism (Free Market): ○ Private property, voluntary exchange, profit motive. ○ Efficient, innovative, but can lead to inequality. Socialism: ○ Gov’t controls resources to meet social goals. ○ Pro: Equity; Con: Low efficiency, high taxes. Communism (Karl Marx): ○ Class struggle (bourgeoisie vs. proletariat). ○ "Abolish private property!" ○ Pro: Public goods for all; Con: No freedom/incentives. Heritage Freedom Index: Assesses economic freedom based on: Rule of Law (property rights) Gov’t Size (tax burden) Regulatory Efficiency (business/labor freedom) Open Markets (trade/investment freedom) Unit 3: Microeconomics Key Concepts: Law of Demand: Price ↑, Quantity Demanded ↓ (inverse relationship). Law of Supply: Price ↑, Quantity Supplied ↑ (direct relationship). Market Equilibrium: Quantity demanded = quantity supplied. Elasticity (Responsiveness): Elastic (>1): High sensitivity to price changes (luxuries). Inelastic (
