Chapter 23 - Chapter 23 Economics Economic Worldviews –...

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Chapter 23: Economics Economic Worldviews Economy is the management of resources to meet needs in the most efficient manner possible. Sustainability is using resources in ways that make them last Resources, Capital & Reserves Capital is any form of wealth available to produce more wealth. Natural: what nature provides Human/cultural: knowledge, experience Manufactured: tools, buildings Social: shared values, communities, trust Resource types Resource – anything with potential use in creating wealth or giving satisfaction. Nonrenewable resources – materials present in fixed amounts in the environment…oil, minerals, etc. Renewable resources – materials that can be replenished or replaced…solar energy Intangible resources – abstract resources such as open space, beauty, serenity, etc. Classical economics Originally a branch of moral philosophy concerned with how individual interests and values intersect with larger social goals. Adam Smith – Founder of modern western economics. Capitalistic system – market competition between willing sellers and buyers is believed to bring about the greatest efficiency of resource use. Quote in textbook. Demand is the amount of a product or service consumers are willing and able to buy at a various prices assuming they are free to express their preferences. Supply is the quantity of that product being offered for sale at various prices. In a free market, supply and demand should come into market equilibrium. Marginal costs – cost of producing one more unit of a product or service Price inelasticity – raising price does not necessarily reduce demand…gasoline, cigs, food Neoclassical economics At the end of the 19 th century, the field of economics divided into two camps: Political economy was concerned with social structures, value systems, and relationships among classes (Marx)
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Neoclassical economics adapted principles of modern science to economic analysis…social concerns not considered Retained emphasis on scarcity and supply and demand in determining prices and resource allocation.
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