BUS 1000 Lecture Notes - Lecture 3: Oligopoly, Mixed Economy, W. M. Keck Observatory

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Key Words/Terms Chapter # 2
o Capitalism
o Consumer price index
o Supply
o Demand
o Economics
o Fiscal policy
o GDP
o Inflation
o Monopolistic competition
o Monopoly
o National debt
o Oligopoly
o Recession
o Socialism
o Unemployment rate
o Mixed economy
o Class film on Robotics
The MAJOR BRANCHES of ECONOMICS
o Economics -- The study of how society employs resources to produce goods and services
for consumption among various groups and individuals.
o Macroeconomics -- Coetrates o the operatio of a atio’s eooy as a hole.
o Microeconomics -- Concentrates on the behavior of people and organizations in markets
for particular products or services.
(Adam Smith’s) INVISIBLE HAND THEORY
o As people improve their own situation in life, they help the economy prosper through
the production of goods, services and ideas.
o Invisible Hand -- When self-directed gain leads to social and economic benefits for the
whole community. (self-regulating behavior of the marketplace)
ADAM SMITH the FATHER of ECONOMICS
o Smith believed that:
Freedom was vital to ay eooy’s surial.
Freedom to own land or property and the right to keep the profits of a business
is essential.
People will work hard if they believe they will be fairly rewarded.
UNDERSTANDING the INVISIBLE HAND THEORY
o A farmer earns money by selling his crops.
o To earn more, the farmer hires farmhands to produce more crops.
o When the farmer produces more, there is plenty of food for the community.
o The farmer helped his employees and his community while helping himself.
MORE PROFITS FROM the GREEN REVOLUTION (Thinking Green)
o The puli’s oer ith gloal arig otriuted to the suess of the Toyota Prius
and Tesla autos.
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