Manon's Econ Blog

Archive for the ‘Section 1’ Category

The Production Probability Curve is useful to understand:

  • how much of Good A we have to trade off in order to produce one extra unit of Good B
  • how much of Good B we have to trade off in order to produce one extra unit of good A
  • how much we can produce of Good B for X unit of Good A (and vice-versa)
  • how much of the two goods we can produce at the same time with the actual resources 
    (the resources being scarce, we cannot produce an infinite amount of both goods) 

We can calculate the opportunity cost and understand the “trade off” looking at the PPC. All possible choices are represented on the PPC.

To make the choice of going somewhere or doing something, you have to:
  •  define the benefit/utility (if someone gives me X$ for it, will I still go?)
  • find the opportunity cost (costs of all activities I would do if I was not going)
  • If the benefit is higher than the opportunity cost, then I will go
  • If the benefit is lower than the opportunity cost, then I will not go

 

The utility changes from one person to another because we all have different tastes, expectations, limits…


  • How is scarcity and survival intertwined?

    Scarcity and survival are intertwined because, as humans, we need two major things to live: food and water. These resources are necessary for human survival, but they are in limited quantity, they cannot be found anywhere. For example, in dry places such as deserts, water is really hard to find; therefore this resource is so scarce in these areas that human beings cannot survive. That is the reason why people tend to go to places where the resources are not too scarce.

    • What are advantages and disadvantages of the two ways society have been organized in the past?

    The society has first been organized “around tradition,” the “son follows [the] father.” This was good in the sense that all kind of jobs were done; the “industrial life would [not] become hopelessly disorganized.” The major problem with this organization of the society is that people had to follow the occupation of their father without questioning, and no evolution in the social classes could be possibly made.

    The society has then been organized following the “whip of authoritarian.” The government had to make sure that all tasks were done, which is an advantage in the evolution of the country because all issues were resolved. The disadvantage of this organization is that if the government collapses, the whole state collapses with it.

    • Why was there no need for economics throughout most of history?

    The whole organization of the society was planned during most of history; when sons followed their fathers, no questions were to be asked so no economics problems were created. When the organization changed to a “whip of authoritarian,” the government resolved economics problems by assigning people to the tasks that needed to be done. There was so no need for economics until the society was organized in a different way.

    • Why do you think the economic revolution was so disturbing?

    The economic revolution was disturbing because no laws were applied on people anymore, they could go on their own. They could do the job they were interesting in, and this was new at the time. They still had restrictions depending on their social classes, but their lives were not dictated by anyone but them. This liberty was new, it had never be experienced before in history.

     

    economic revolution