Economics 2

Crash Course Video 2

22 cards·by tgrdeets

Most empires, wars, and human endeavors can be explained by economics if you just ask which question?

Who wanted what?

What kind of lives did the majority of humans who have ever lived have?

Terrible (in a statistical sense)

What historical event caused human populations to see a sustained improvement in living standards?

The Industrial Revolution

Who is considered to be the first modern economist?

Adam Smith

What does specialization of labor do?

Make labor/people more productive

What has the modern world done with the concept of specialization?

Taken it to an extreme

If nations specialize in certain products, what is the most efficient way for them to obtain products they aren’t specialists at making?

Trade

What is an economic model?

A visual to help simplify and explain concepts

What does a production possibilities frontier model demonstrate?

The limits of possible production of two goods / Trade-offs that can be made when producing two goods

How many different kinds of goods does a typical modern economy produce, and how does this relate to the production possibilities frontier?

Millions.The PPF model only demonstrates trade-offs between two goods, the same principles about limits apply if millions produced

All points located INSIDE the curve of the production possibilities frontier demonstrate what kind of use of resources?

Inefficient

All points located ON the curve of the production possibilities frontier demonstrate what kind of use of resources?

Efficient

All points located OUTSIDE the curve of the production possibilities frontier demonstrate what kind of use of resources?

Impossible

What does it mean to have an “absolute advantage” in production?

You can produce more of that good than another nation as long as you put you put all your resources to work producing that specific good.

Different combinations of production on a production possibilities frontier allows to calculate exactly what economic concept?

Opportunity cost

What does it mean to have a “comparative advantage” in production?

You can produce a good at a lower opportunity cost than another nation could manage.

According to the economic model in the video, why is it better for the U.S. to trade with China to get shoes, rather than manufacture shoes?

The U.S. can get shoes at a lower opportunity cost by trading than by making shoes for itself.

According to the economic model explained in the video, when two nations are trading with one another, who benefits?

Both of the nations

The U.S. is the world’s leading producer and exporter of what item?

Planes

Economists consider trade mutually beneficial, but there are still serious problems associated with it, such as ----.

Child labor, dangerous working condition, pollution

Most economists agree that specialization and trade do what?

Make the world better off

Name at least two nations that, at the time the video was produced, less economically developed than they could be due to a lack of trade

Iran / Zimbabwe / Cuba / Venezuela