Study Guide for Team Test 2 SS101 Fall 2013 Who What is it What are the main details of the person concept document Each answer should be 5 sentences long If I ask you a person you need to mention his main ideas and say a sentence or two about each of them If I ask you about a concept then you need to mention who came up with it this is only relevant for some of the terms and spend the other four to five sentences explaining what it is and why it is significant Economic Growth because of the increasing of the division of labour according to Adam Smith is the increase in market values of goods and services for an economy Economic Development you have radical changes in the economy Europe 19th century you re industrializing A change in the relationship of the factors of production Theres always problems Economic Disruption Factors of Production o Land Oil Natural resources o Labor how many hours are avalible how much can they accomplish in these hours o Technology how advanced are they Telegraphs or telephones o Capital not just money buying buildings factories to help you in the future Its not just the investing it s the investment itself Bottleneck your all stuck in the middle Theirs a blockage Soviet Russia under Joseph Stalin Peasants were going to use new tractors etc However nobody knows how to drive Than the tractors break down and no one knows how to fix them and they lack technology to fix them Lack of education and Technology for peasants Specific to the factors of production embarking on economic development dramatic shifts in how you produce your goods you have to have changes in the 4 factors of development Land labor technocology capital Bottleneck comes when one of the factors doesn t change 18 38 Traditional Economy original economic system in which traditions customs and beliefs shape the goods and products the society creates Countries that use this type of economic system are often rural and farm based Also known as a subsistence economy a traditional economy is defined by bartering and trading Little surplus is produced and if any excess goods are made they are typically given to a ruling authority or landowner EG example of subsistence economy native americans take care of themselves produce what they need when they need it and include no surplus undeveloped economic systems having tools or techniques seen as outdated Based on custom and tradition or command with economic decisions based on customs or beliefs of the community family clan or tribe Command Economy one of the three Central authority very good at economic development can have rapid economic change The government controls their is not a lot of movement Taxaition The governement takes money from you and decides what their going to do Market Economy Adam smith looked at this the British economy If theres demand then people will make the products production will exist and people will make money If no demand no one will produce then no money The Invisible Hand metaphor by Adam Smith to describe the self regulation of an economic market Adam Smith could be called the first modern economist and is the first person to explain how a market economy functioned he didn t create a market economy he explained what he saw happening in Britain in the late 1700s He said that Division of Labour made it possible to have production and money Said that the british were greedy and selfish They are working not for societal obligation but greed money BUT it was still kind of working since ADAM SAYS Greed is necessary to drive the economy EG In All Souls people knew that i was a lower class but no one acknowledges it Enlightened self interest Adam Smith greed Smiths word for greedy economy Survival means green in his case WOOLEN COAT FOR ENLIGHTENED SELF INTEREST o Greed is good o If there is a demand for it its going to be made o If theres demand someone has to produce it have to require workers and jobs becomes a complete cycle o You give people jobs then they have money which increases demand o He is saying go for it o Pretty shocking the way humans will live better is through one of the 7 deadly sins its bazaar Wool Coat you have to get the money to get the wool coat people would get it to you because there is demand for a product and somebody will make money Market Economy fuctions of the notion that if there is demand for something someone will make it functions through greed Division of Labor Adam Smith EFFECTS Production the pin story Society people specialize in skill Group decides to support people who specialize in certain skills Family division of tasks in order by mother and father in order to socialization children The mom will take out the daughter for gathering greatest improvement in the productive powers of labour greater part of a skill dexterity and judgement with which it is anywhere directed or applied This idea relates primarily to the specialization of the labor force essentially the breaking down of large jobs into many tiny components Each worker becomes so specialized in one area of production thus increasing the efficiency Work is very individualized EG 10 people 48 000 pins Dividing up the process of production In relation to repetition makes you succeed in one job EG Basketball practice specialized jobs lead to multiple industries and multiple products Separation of different trades and employment Example Page 148 In every improved society the farmer is generally nothing but a farmer and the manufacturer is nothing but that The Labour too which is necessary to produce any one complete manufacture is almost always divided among a great number of hands The fact that laborers do not have to switch tasks during the day further saves time and money This is exactly what allowed Victorian factories to grow throughout the nineteenth century Assembly line technology made it necessary for a worker to focus his or her attention on one small part of the production process Smith recognized the potential problems of this development He pointed out that forcing individuals to perform repetitious tasks would lead to an ignorant dissatisfied work force He then advanced the revolutionary belief that governments had an obligation to provide education to workers This sprung from the hope that education could combat the deleterious effects of factory life Division of labor also implies assigning each worker to the job that suits him best Productive labor to Smith fulfills two important requirements First it must