Unit 2- The Age of Reason: - Homo Economicus

Homo Economicus (Rational Choice Theory)

_______ is the idea that people make choices mainly to increase their own happiness while also considering the impact of their actions on others.

Adam Smith and the Invisible Hand

According to ________, individuals seeking their own benefit can lead to improved economic outcomes for everyone, as seen in the relationship between supply and demand.

Smithian Growth

_______ refers to the idea that when people buy more goods, it encourages businesses to grow and create jobs, leading to an expanding economy.

Classical Economics

_______ is an economic theory that focuses on how the factors of production, like labor and land, work together to create goods and contribute to economic growth.

Neoclassical Economics

This approach to economics emphasizes the ________ theory, which suggests that how much pleasure a consumer gets from a good affects how much they are willing to pay for it.

Marginal Utility

_______ is the extra satisfaction a person gains from consuming one additional item. Understanding this helps explain consumer behavior.

Diamond-Water Paradox

The ________ shows why something like diamonds, which people desire but don't need, is more expensive than water, which is essential for life. It highlights the role of scarcity in value.

Anne-Robert-Jacques Turgot on Taxation

_______ believed taxation should be fair and minimal. He argued that everyone should contribute to taxes without disrupting the market's natural flow.

Thomas Malthus and Population Theory

_______ posited that if population grows unchecked, it will surpass food supply, leading to famine. His ideas were later challenged by advancements in agriculture.

Jean-Baptiste Say and Say's Law

_______ states that the act of producing goods creates demand for those goods, meaning that supply will always generate the income needed for consumption.

Keynesian Economics and Demand

_______ focuses on how an economy thrives on high demand and suggests that government actions can help boost demand during tough times.

David Ricardo and Tax Burden

_______ introduced the idea that if the government borrows money today, it will need to raise taxes in the future, which is important for taxpayers to understand.

Ricardo and the Corn Laws

_______ opposed tariffs on grain imports, arguing they unfairly raised prices for consumers and hurt trade.