ECC 1000 Week 1 Condensed

What does the 'hockey stick' graph illustrate about living standards?

It shows centuries of flat living standards followed by steep growth.

When did Britain, Japan, China, and India experience significant growth in living standards?

Britain (~1650), Japan (~1870), China & India (late 20th century).

How did colonialism affect countries like India, China, Nigeria, and Latin America?

Colonialism negatively impacted their economic growth.

What is catch-up growth, and which countries are examples of it?

Catch-up growth refers to modern growth in China and India, where they are rapidly improving their living standards.

What historical data source provides context for understanding economic growth?

Data from Angus Maddison.

What trend is observed in CO₂ emissions and global temperatures since the 1800s?

Both show a 'hockey stick' rise.

What are the primary causes of the increase in CO₂ emissions?

Burning fossil fuels such as coal, oil, and gas.

What are some effects of climate change?

Melting ice caps, rising sea levels, climate shifts, and loss of habitable land.

How does income inequality between countries compare historically?

It has grown dramatically over the last 1,000 years.

What was the Great Divergence, and when did it begin?

It refers to the deepening global inequality that began in the 17th-18th centuries.

What does the Malthusian Model suggest about technological gains and population growth?

Technological gains lead to population growth, which reduces average income.

What is the mechanism of the Malthusian Trap?

Higher income leads to population growth, which then causes income to fall back to subsistence levels.

What are the key characteristics of capitalist institutions that emerged in the 18th century?

Private property, markets, and firms.

How does capitalism contribute to economic growth?

It incentivizes technological adoption and breaks the Malthusian trap.

What transformation occurs in economies during structural economic transformation?

A shift from agriculture to manufacturing and services.

What role does specialization play in economic growth?

It increases productivity through learning, resource use, and economies of scale.

What is the significance of comparative advantage in trade?

It allows all parties to benefit from trade, even if one is more efficient at everything.

How do firms choose production technologies?

Based on available inputs and desired outputs.

What is 'creative destruction' in economic terms?

It refers to the process where old firms and technologies are replaced, fueling progress.

What is the purpose of economic models?

To simplify reality and highlight key economic forces.

What does 'ceteris paribus' mean in economic models?

It means holding other factors constant to isolate key relationships.

What is the role of innovation in economic decision-making?

It drives choices based on the highest net benefit and shapes technological adoption.

What is the impact of falling input prices on technology choices?

It shifts technology choices towards cheaper options, such as coal leading to steam power.

What does the term 'innovation rent' refer to?

The profit gained from a new, non-replicable technology.

How does the division of labor contribute to efficiency?

It boosts efficiency within and across firms and nations.

What is the significance of the Industrial Revolution in terms of technological progress?

It triggered continuous innovation and significantly increased productivity.

What is the relationship between economic rent and decision-making?

Economic rent represents the extra benefit from the best choice made by individuals.