Capitalist Revolution

What is a possible explanation of the increase in speed of news and deviation from mean temperature in recent times?

Emergence in the 18th century and eventual global spread of a way of organising the economy - capitalism

What is an economic system defined by

It’s institutions - formal laws or informal customs

Institutions of a capitalist system

Private property, markets, firms

Ownership rights

Especially of capital goods - non-labour inputs used in production - can be held by an individual, family, firm

Markets

Way to exchange things we produce

How do firms work?

Individuals/groups purchase inputs and labour to make output. They own the output and sell it in goods markets to earn profit, or at least cover input costs

7 Types of businesses

Sole proprietorship, partnership, limited partnership, corporation, LLC, Non-profit, Co-op

How does capitalism create incentive to innovate?

Rewarded for finding a way to do something officially, may go out of business if less efficient than competition

How does specialisation increase productivity?

Focus on getting better at a limited range of activities, taking advantage of natural differences in skill and talent, economies of scale, easier to coordinate within firms

What is economies of scale?

Cost advantage experienced by a firm when it increases its level of output

What can increase specialisation?

Advance in technology because further specialised knowledge is required

Should you specialise if you’re an expert in multiple things?

Yes because of comparative advantage