Economic Theories and Market Dynamics
Economic Foundations
Economy: The rational application of scarce goods.
Factors of Production: Resources adding value in production.
Historical Economic Theories
Mercantilism (17th-18th Centuries)
Emphasis on precious metals and foreign trade. Key figures: Jean Baptiste Colbert, David Hume.
Physiocrats (18th Century)
Agriculture as the only productive activity. Key figure: François Quesnay.
Classical Economics (Late 18th Century)
Industrial Revolution influence, invisible hand theory (Adam Smith). Key figures: David Ricardo, Jean-Baptiste Say, Alfred Marshall, Thomas Malthus.
Neoclassical Economics (19th Century)
Marginal utility theory. Key figure: Hermann Heinrich Gossen.
Marxism
Labor value theory (Karl Marx).
Keynesian Economics
Macroeconomics focus, state intervention. Key figure: John Maynard Keynes.
Structuralism
Latin American economic issues. Key figure: Aldo Ferrer.
Economic Challenges
Economic Crisis
Types of scarcity: absolute, relative, comparative.
Three Economic Problems
- What to produce?
- How to produce?
- For whom to produce?
Production Possibility Frontier: A country’s production capacity.
Maslow’s Hierarchy of Needs
- Physiological
- Safety
- Belonging
- Esteem
- Self-actualization
Economic Growth Theory: Resource abundance fosters growth.
Economic Systems and Policies
Economic System: Addressing human needs and economic problems.
Economic Policy: Government strategies for economic objectives.
Political Economy: Laws explaining economic reality.
Microeconomics: Individual agent behavior.
Macroeconomics: Global economic behavior.
Market Dynamics
Globalization: Expanding markets beyond national borders.
Neoliberalism: Free market model.
Liberalism: Free market concept (Adam Smith).
Development: Societal economic modernization.
Growth: Increased production.
Markets: Exchange platforms for buyers and sellers.
Price: Monetary value of goods.
Supply and Demand
Elements: Price and quantity.
Factors Affecting Demand: Price, income, related goods, costs, special factors.
Law of Supply: Producer determination.
Factors Affecting Supply: Price, production costs, substitutes, price increases.
Demand: Willingness to buy at various prices.
Types of Demand:
- Inelastic: Insensitive to price changes (e.g., gasoline).
- Perfectly Inelastic: Unchanged by price (e.g., water).
- Elastic: Sensitive to price changes (e.g., soda).
- Perfectly Elastic: Drastically affected by price changes (e.g., fruit stand).