Apec exam 1 (modules 1 & 2)

The crown gave a "charter" or grant

-economic rights -political and judicial authority

The power of trade: How can this make people better off?

1. when preferences differ 2. when productivity increase due to specialization -division of knowledge -comparative advantage (more later)

Dawes act

1887 law that distributed reservation land to individual Native American owners

Indian Reorganization Act

1934 - Restored tribal ownership of lands, recognized tribal constitutions and government, and provided loans for economic development. • Ended the Dawes Act • Centerpiece of "Indian New Deal" • Goal: rather than encourage assimilation, the purpose of the IRA was to encourage self-government and traditions/culture

By 1825, ____% of slaves in western hemisphere were in U.S.

36

Only ____% of slave children in U.S. lived to age 5

45

Between 10 and 12 million slaves transported to New World Jamestown 1619 • North America: ~____%

7%

Trade-off

A balance achieved between two desirable but incompatible features

Market

A focal center where goods and services are exchanged -buyers and sellers to interact in order to facilitate exchange

Capital Intensive

A production process requiring a large investment of capital (money), relative to other inputs.

Open access

A resource management setting where each individual decides on his or her own level of use without restriction -forests, international waters

Stock

A share of ownership in a corporation or company.

Chattel slavery

Also known as traditional slavery, an institution where humans are treated as personal property, to be bought and sold as if they were commodities.

Contract

An agreement between two parties regarding employment, sales, or tenancy that is enforceable by law.

How did charter companies work

An association formed by investors or shareholders, and authorized by the Crown, for the purpose of engaging in trade, exploration, and colonization Private individuals (usually wealthy merchants put up money to finance (investment) an exploration or settlement -agree to share gains

indentured servitude

An institution by which people legally enter into an unfree labor contract where they are bound to work for an employer for a specified period of time. • Over half of European immigrants to the 13 colonies were indentured

Unit of account

Any economic item used as a monetary unity to mark prices of goods and services

Non-market value

Benefits of a good or service that are not exchanged in a market -ex: outdoor recreation, wild game, air quality

Plough and Household Production

Descendants of societies that traditionally practiced plough agriculture today have less equal gender norms, measured using reported gender-role attitudes and female participation in the workplace, politics, and entrepreneurial activities.

Tragedy of the commons

Economic dilemma where every individual acting in their own interest brings ruin to the group collectively -bison, fish, forests

Economics as a science

Economics is a social science -economists use the scientific method -positive analysis and normative analysis

Common Law

English law derived from customs and norms established through judicial precedent -very influential in the colonies and early American republic

Positive analysis

Examination of research questions that can be tested and proven right or wrong -The study of "What is?" -Economics generally perform this type of analysis

Barter economics

Exchange goods without involving money. -inefficient -require a double coincidence of wants -easier to avoid bartering and use unit of account (money) instead

Specie

Gold or silver minted into coins

Rational behavior

In economics, agents who make choices to maximize some type of objective are rational.

Indian Removal Act of 1830

Passed by Congress under the Jackson administration, this act removed all Indians east of the Mississippi to an "Indian Territory" where they would be "permanently" housed.

bidding price

Price a buyer offers for exchang

asking price

Price a seller offers for exchange

Normative analysis

Research that express subjective opinions or relies on value -based judgements.-the study of "what ought to be?"

• What motivated the early explorers? • What were the economic incentives? • How were the expeditions financed?

Shows how institutions, economics, and natural resources interact to influence future outcomes

Incentive

Something, such as money, a reward, or lack of cost, which motivates an individual to perform an action -when incentives change, so do behavior

Trail of tears

The Cherokee Indians were forced to leave their lands. They traveled from North Carolina and Georgia through Tennessee, Kentucky, Illinois, Missouri, and Arkansas-more than 800 miles (1,287 km)-to the Indian Territory. More than 4, 00 Cherokees died of cold, disease, and lack of food during the 116-day journey.

Division of Labor

The assignment of different parts of a manufacturing process or task to different people in order to improve efficiency

Return on investment

The benefit an investor receives for the outlay of capital. • The expected return on investment is proportional to risk taken on by investor.

return on investment

The benefit an investor receives for the outlay of capital.

Returns to Scale

The change in production (or output) that results when factors of production (or inputs) are increased. • Increasing • Decreasing • Constant • Depends on technology

Columbian exchange

The exchange of plants, animals, diseases, and technologies between the Americas and the rest of the world following Columbus's voyages.

opportunity cost

The highest valued alternative given up in order to engage in some activity is known as -value of opportunity lost

Labor market

The interaction of workers, those seeking employment, and employers, those seeking labor.

Labor

The measure of work done by human beings. One of the factors of production.

Lost cause

The phrase many white southerners applied to their Civil War defeat. They viewed the war as a noble cause but only a temporary setback in the South's ultimate vindication

Import

The purchase of goods or services from an external source

Export

The sale of goods or services produced in a home country (or local market) to other markets

Do you have time to do everything you want to do? • Does you have enough money to buy everything you want? • Do governments have enough resources to solve all problems?

Trade offs

Balance of trade

Value of exports minus value of imports.

Old world crops

Wheat, barley, oats

Economic institutions

When markets work well, individuals pursuing their own interest also promote social interest -it is as if the market is led by an invisible hand

Resource is

a common pool resource, open access

Tragedy of the anti-commons

a coordination breakdown caused by numerous rights holders who prevent others from using a resources in a socially beneficial manner. - t.o.c : no property rights = overused - t.o.a.c : too many property rights = land underused

Private good

a good that is both excludable and rival in consumption

Commodity money

a good with exchange value separate from the market value of the good

Excludable good

a person can be prevented from using it

Public good

a shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exclude those who did not pay

Good institutions

align self interest with social interest

Double coincidence of wants

an exchange situation where the supplier of good A desires good B, and the supplier of food B desires good A

Fractionation

as original allottees die, heirs receive equal, undivided interests -can sometimes result in the tragedy of the anti-commons

Solutions to tragedy of the commons

asign property rights, government regulation, and social norms

Insecure property rights

assignment of incomplete authority to determine how resource is used through time

Who valued land more at the margin between native americans and colonists?

colonists -more technology produced with less land

The institution of charter companies

created a culture where local communities were highly independent • Judicial authority: court system • Political authority: elected/appointed officials • Economically self-sufficient and productive/high standard of living

A business owner could seek to maximize profits or a student could work to maximize gpa

examples of rational behavior

With the columbian exchange came

expanded european populations and collapsed indigenous populations -between 80 and 90 % wiped out within one century of european contact (mostly disease, some wars)

North

fur, timber, shipbuilding

common pool resource

goods that are available to everyone, such as open ocean fisheries

When markets do not work well

governments can change incentives with taxes, subsides , or regulation

higher risk

higher return

Trade offs are necessary because

human wants are unlimited and resources are scarce

rival good

if one person's consumption of the good decreases the quantity (or quality) of the resource available for use by others

The expected return on investment

is proportional to risk taken on by investor

Civil Law or Statutory Law

law based on fixed codes or statutes

marginal choices include

marginal cost, marginal revenue, and marginal tax rates

Natural resource

natural occurring materials or substances that can be used for economic gain -ex: forests, oil, mining

club good

non-rival but excludable

recessions

periods of economic downturns when output and employment are falling -lower potential earnings

Shifting Agriculture:

plots of land are cultivated temporarily, then abandoned and allowed to revert to their natural vegetation

New world crops

potatoes, corn, cassava, peanuts, tobacco, cotten

How does trade make people better off?

preferences may differ, specialization -division of knowledge -comparative advantage

Price

quantity of payment given from one party to another in exchange for goods or services

Institutions

social or legal rules and norms that structure social order: established laws, practices, or customs -can be formal or informal -identified with a social purpose, transcending individuals, and intentions by mediating the rules that govern living behavior

What is economics?

social science studying human behavior as the relationship between scarce resources and unlimited wants. - "The study of the use of scarce resources that have alternative uses" - Economists study the choices people make!

redemption servants

sold themselves into indentured servitude to pay back shipping company for transatlantic voyage

Property rights

the ability of an individual to own and exercise control over scarce resources

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

Absolute advantage

the ability to produce a good using fewer inputs than another producer

Interest rate

the additional proportion of the original due in return for borrowing an amount of money

consumer surplus

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

Producer surplus

the amount a seller is paid for a good minus the seller's cost of providing it

price discrimination

the business practice of selling the same good at different prices to different customers

willingness to pay

the maximum amount that a buyer will pay for a good

Risk

the probability of a negative outcome

common property

the rights to certain resources are held by large groups of individuals

South

tobacco, indigo, rice

Triangle trade

trade that evolves when a region has export commodities not needed in the region where its major imports come from.

What is the opportunity cost of attending college?

tuition, books, room and board, forone earnings

Thinking on the margin

we make choices by considering the benefits and costs of a little more or a little less -Marginal means incrementally more or less

What motivated early explorers?

wealth, political power, god

Plough Agriculture

wood, iron, or steel frame with an attached blade or stick used to cut and loosen the soil.

How were the early American colonies populated?

• Many (not all) were primarily business ventures. • Many were financed using charter companies • Money raised by selling stock in the company (fractional ownership)