Home Fertilizers Dolan Lindsay Market Microeconomic Model. Microeconomic model of the market. Who said? who did? david ricardo and the theory of comparative advantage

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Dolan Lindsay Market Microeconomic Model. Microeconomic model of the market. Who said? who did? david ricardo and the theory of comparative advantage

4. The course of the economy in transition / Ed. Abalkina A.I. - M., 1997. Section 1.1-1.3, 1.5.

5. Mamedov O. Yu. Modern economy. Public training course. Rostov-on-Don, Phoenix publishing house, 1997

6. World Economy: Textbook / edited by Prof. A.S. Bulatov. - M: Jurist, 2003.-734s.

This group includes states that are making the transition from an administrative-command (socialist) economy to a market one (therefore, they are often called post-socialist). This transition has been taking place since the 1980s and 1990s. These are 12 countries of Central and Eastern Europe, 15 countries of the former Soviet republics, as well as Mongolia, China and Vietnam (the last two countries formally continue to build socialism). Countries with economies in transition account for about 17 –18% of world GDP, including for the countries of Central and Eastern Europe (excluding the Baltic States) - less than 2%, the former Soviet republics - more than 4% (including for Russia - about 3%), China - about 12%. This youngest group of countries can be divided into subgroups. One subgroup can be combined with the former Soviet republics, which are now united in the Commonwealth of Independent States (CIS). Thus, such a merger leads to a reform of the economies of these countries. Another subgroup can be combined with the countries of Central and Eastern Europe, the Baltic countries. These countries are characterized by a radical approach to reforms, a desire to enter the EU, a relatively high level of development of most of them. But due to the strong lag behind the leaders of this subgroup of Albania, Bulgaria, Romania and the republics of the former Yugoslavia, it is advisable to include them in the first subgroup. China and Vietnam can be divided into a separate subgroup. The low level of socio-economic development is now rapidly increasing. Of the large group of countries with a command economy by the end of the 1990s. only two countries remained: North Korea and Cuba.

Classification of countries with economies in transition

Transition economies in Europe and the former Soviet Union
	CEE countries	Albania, Bulgaria, Croatia, Czech Republic, The former Yugoslav Republic of Macedonia, Hungary, Poland, Romania, Slovak Republic, Slovenia

	The baltics	Estonia, Latvia, Lithuania

		Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan

Transition economies in Asia
	Cambodia, China, Laos, Vietnam

NIS countries (newly industrialized countries) include: Republic of Korea, Singapore, Taiwan; Chile, Malaysia, Hong Kong, etc. They belong to the developing countries.

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Rarity and the activities of people in conditions of scarcity are central themes of economics as a science, which can be defined as a social science that studies the choices that people make using scarce resources to satisfy their wants and needs.

As it becomes clear from the definition, the subject of economic theory is not money or wealth, but people. Economics studies people, since scarcity itself is a purely human phenomenon. Although humans in their work are limited by such physical limits as the laws of orbital mechanics, satellite parking was not uncommon until they became the object of human desires. The same is the case with other rare resources - Mozzarella cheese is rare because people want to eat pizza, real estate in Manhattan is rare because people want to live and do business on this crowded island, and time is rare because on people plan a lot of things every day.

The second reason economics can be considered a science of people is because the choices it studies improve in a social context. Therefore, economics is considered a social science rather than a branch of operational analysis, engineering or mathematics. Consider, for example, the social context of satellite space utilization decisions. People need these sites because they need a connection with each other. The decision to use resources specifically for launching satellites reflects the judgment that human needs must be met before any other needs that require the use of the same resources. The UN resolutions on ownership of orbital space are the result of a debate over the rights of rich and poor nations to control the world's limited resources.

You make economic choices when you buy clothes or food, when you work, and even when you fill one of the rare gaps in your curriculum with economics rather than environmental toxicology. Economic choices take place everywhere: in the factory that produced the computer that printed this book, in government policymakers, in nonprofit organizations such as churches and student clubs, and in many other places and situations.

All the examples just given are from a branch of economics called microeconomics. The prefix micro, meaning "small," reflects the fact that this section of our subject studies the choices made by small economic units such as households. literature denoting a group of people who pool their income, have common property and make economic decisions together; a household can also consist of one person; households supply factors of production, and consume production goods and services), firms and government agencies. Although these units are "small", microeconomics still embraces in its study many different problems of a truly global scale. For example, households, firms and government agencies trade worldwide in goods such as cars, chemical products, and crude oil. This trade and the policies governing it are in the focus of microeconomics.

There is also another section in economics called macroeconomics. The prefix macro for large indicates that this branch of theory studies large-scale economic phenomena. Typical macroeconomic problems are how to create an environment in which job seekers can find it, how to protect the economy from the harmful effects of a general rise in prices called inflation, how to ensure that living conditions are constantly improving. Government policies related to taxes, spending, budget deficits, and the financial system are the main themes of macroeconomics. However, just as the macroeconomic phenomenon of inflation is the sum of millions of individual choices concerning the prices of specific goods and services, so the entire macroeconomics rests on a microeconomic foundation.

Whether we study micro- or macroeconomics, internal or external economic relations - in any case, economic analysis requires a special way of thinking about how people make decisions about the use of scarce resources. This introductory chapter paves the way for a more detailed presentation of the material, explaining some of the principles underlying economic thinking. The first section discusses four key choices that any economic system must make. The next section examines the types of social institutions within which decisions are made, and the final section discusses some important aspects of the economic method.

WHAT? AS? WHO? FOR WHOM?

Every economic system is faced with the need to make certain basic types of choices. Among them, the most important are the following: what goods should be produced, how they should be produced, who should perform what work, and for whom the results of this work are intended. The need for each of these choices is dictated by the scarcity of resources, and each particular choice can be considered to explain the key elements of economic thinking.

Deciding what to produce: opportunity cost

The first critical choice is what products to produce. In the modern economic system, the number of created goods and services is enormous. However, the essential features of choosing what to produce can be illustrated by the example of an economic system in which there are only two alternative goods, for example, cars and education. For many students, life without a car (or with a rattle train, which you can't even call a car) is a sacrifice made to get a higher education. The same situation exists in our economic system as a whole - there cannot be enough cars and education to satisfy everyone. Someone will have to choose in what quantities what product to produce.

The inability to produce as many goods as people would like is a consequence of the scarcity of productive resources used to produce these goods. Even in order to produce the simplest items, we will have to combine many rare resources. For example, to make a table, we need wood, nails, glue, a hammer, a saw, the work of a carpenter, a molar, and so on. For convenience, productive resources are usually divided into three main categories, which are called factors of production. Work includes all productive costs committed by people in the course of their muscular and intellectual activity. Capital includes all those productive resources that are created by people: tools, machines, infrastructure, as well as intangible things, such as computer programs.

Natural resources- this is everything that can be used in production in its natural state, without processing, for example, fertile land, construction sites, forests, materials.

Productive resources used in one location cannot be used in another location at the same time. Steel, concrete and construction sites used to build a car factory can no longer be used in school construction. People who work as teachers cannot work on the assembly lines of automobile factories. Even while students spend in class preparing for exams could represent productive resources if students instead of preparing for exams were busy working in the factory. Since production uses resources that could be used elsewhere, the production of any good entails the loss of the ability to produce another good. Alternative cost a good or service is the value measured in terms of the lost opportunity to engage in the best available alternative activity, requiring the same time or the same resources.

Imagine an economic system in which there are only two commodities - cars and education. In this system, the opportunity cost of production of a college graduate can be represented in the form of the number of machines that could be produced using the same labor, capital, natural resources. For example, the opportunity cost of a college graduate is five Ford Mustangs. Such the arithmetic relation (of graduates to machines, or machines to graduates) allows us to express the opportunity value in the case when we consider two goods. More typical, however, is the situation in which we have a lot of goods. In this case, having more of one item means donating a small amount of each of the other items. In a multi-commodity system, the opportunity value can be expressed in terms of a common unit of measure, money.

For example, instead of saying that a college education is worth five Mustangs or that a Mustang is worth one-fifth of an education, we can simply say that the alternative costs of a car and education are $ 12,000 and $ 60,000, respectively.

It is very convenient to have a common unit of measurement, but you should be very careful when measuring alternative values in money, because not all monetary expenses represent a sacrifice of the opportunity to do otherwise. At the same time, not all the sacrifices we make take the form of monetary costs. Section 1.1. Applying Economic Knowledge, which analyzes both the monetary costs and the opportunity cost of college, will clarify this issue.

Cash cost and opportunity cost are overlapping concepts. Some alternative costs, such as tuition fees, take the form of cash costs, while others, such as lost income, do not appear in cash costs. Some of the monetary costs, like tuition fees, represent an opportunity cost because that money could have been spent elsewhere. Other monetary expenses, such as housing and food, are not included in the alternative tuition fees, since a person has to live somewhere and have something to eat, regardless of whether he is a student or not.

The importance of the concept of opportunity cost will be emphasized again and again throughout this book. The habit of reasoning in terms of opportunity cost is one of the most important features of economic thinking.

APPLYING ECONOMIC KNOWLEDGE
Alternative cost of college tuition

How much will college tuition cost you? If you are a student at a typical four-year private college in the United States, you can answer this question by building your budget as shown in Figure A. something that your parents actually have to pay for each year.

Rice. A. Cash budget

Your personal cash costs may be higher or lower than these averages. However, these are the expense items you are thinking about when calculating your tuition fees anyway. If you start thinking like an economist, then perhaps you will revise this budget in terms of alternative costs. Which of the line items in figure A represent the opportunities you donated to attend college? Maybe you have left out some lost alternatives? To answer these questions, compare Figure A with Figure B, which shows the alternative cost budget.

Rice. B. Alternative Cost Budget (US $)

Which budget you use depends on the type of decision you make.

If you've already decided to go to college and are now planning to allocate your finances, then the cash budget will tell you how much money you have to take out of your savings, parenting funds, and scholarships to make ends meet. But if you are making a choice: go to college or pursue a career that does not require higher education, then you need to consider the opportunity cost of education.

Deciding How to Produce: Efficiency and Entrepreneurship

The second major economic choice is how to produce. There are several production methods for almost any product or service.

Cars, for example, can be made in highly automated factories with a lot of capital equipment and relatively little labor, but they can also be made in small businesses that use a lot of labor and only a few general purpose machines. Ford Mustang is manufactured in the first way, and Lotus - in the second. The same can be said for education. Economics can be taught in a small class, where one teacher at the blackboard works with twenty students, but the same subject can be studied in a large lecture hall, where the teacher uses monitors, projectors, computers to teach hundreds of students at the same time.

Efficiency. Efficiency is a key consideration when deciding how to produce. In everyday speech, the word efficiency means that production is carried out with minimal costs, efforts and losses. Economists use a more precise definition. The term economic efficiency denotes a state of affairs in which it is impossible to make a single change that more fully satisfies the desires of one person, without harming the satisfaction of the desires of another person. (Efficiency determined in this way is sometimes called Pareto efficiency, after the Italian economist Vilfredo Pareto. - Approx. auth.)

Although the language in which this definition is presented may not be familiar to you, the definition itself is actually very close to the generally accepted concept of effectiveness. If there is a way to improve your situation without harming anyone, then passing by this opportunity is pointless (ineffective). If I have a fountain pen that I’m not currently using, and you need it, it would be a waste of you to buy your own pen. It will be much more efficient to lend you my pen; it improves your position and does not worsen mine. When there is a way to improve the position of both parties, then not taking advantage of this opportunity is a waste. You lend me a bike and I will lend you a volleyball. If I don’t ride a bike very often, and you don’t play volleyball very often, then it’s not profitable for both of us to buy these things.

Cost-effectiveness has many applications, one of which is the question of how to produce. Efficiency in production is a situation in which, given the productive resources and the existing level of knowledge, it is impossible to produce more of one good without sacrificing the ability to produce some quantity of another good.

The concept of efficiency in production, like the broader concept of economic efficiency, includes the generally accepted meaning - avoidance of losses. For example, a person who grows apples always strives to apply fertilizers in strictly defined quantities, no more than is required for each of the trees. Exceeding the dose is ineffective in the conventional sense of the word; after a certain point, an increase in the amount of fertilizer no longer leads to an increase in the number of apples. It would be much better to use excess fertilizers in the production of, for example, peaches. In this case, more peaches will be produced without reducing the apple yield.

The scientific economic definition includes some more sophisticated possibilities for improving production efficiency in cases where the waste of resources is not so obvious. In the state of Georgia, for example, you can grow apples. It is also possible to grow peaches in Vermont by choosing special tree varieties and providing winter protection. Some hobbyists grow these fruits in both states. However, it would be inefficient to grow them in this way on a commercial scale, even if the producers of both states followed the most advanced technologies and did not allow any losses. To understand why this is so, suppose that initially apples and peach trees were planted in equal amounts in both states. Now we will uproot 500 freezing peach trees in Vermont and replace them with flowering apple trees. At the same time in Georgia, we will remove 500 sun-roasted apple trees from the ground and replace them with peach trees. All this will lead to an increase in the output of both types of fruit without increasing the amount of land, labor and capital used in production.

The original distribution of trees evenly was ineffective.

How to increase production capacity. When efficiency is achieved, more goods can be produced at the cost of losing the ability to produce something else if productive resources and knowledge are unchanged. But over time, production potential can expand as a result of the accumulation of new resources and the invention of new ways of how to use these resources.

In the past, the discovery of new sources of natural resources was an important way to expand productive capacity. Another source of growth was (and still is) population growth. However, when the most easily accessible sources of natural resources are exhausted, and population growth slows down, then among the three classical factors of production, the importance of capital increases sharply, which now becomes the main source of expanding production opportunities.

An increase in the volume of capital functioning in the economic system, that is, an increase in the supply of productive resources carried out by people, is called an investment. Investment means giving up current consumption in favor of future consumption. To build more factories, roads, computers, we are forced to withdraw resources from the production of bread, films, services and other things that can satisfy our momentary desires. But at the same time, we are in a better position in terms of satisfying tomorrow's desires.

The growth in the number of impersonal factors of production is not the only source of economic growth. No less important are changes in human knowledge - the invention of new technology, new forms of organization, new ways of meeting needs. The process of finding new opportunities - introducing new methods of production, being open to new perspectives, overcoming old limitations - all this is called entrepreneurship. It is a dynamic process that breaks down the barriers established by the existing level of knowledge and supply of factors of production.

Entrepreneurship does not necessarily mean inventing something or looking for a new business, although this is often the case. This phenomenon can also manifest itself in the search for a new market for an existing product - for example, you can convince people in New England that the vegetable salad, which is so popular in the southwest of the country, is a great second breakfast. Entrepreneurship can take advantage of price differentials in two markets — for example, buying low-price hay in Pennsylvania, where the weather was fine last year, and then selling that hay in Virginia, where the weather was too dry.

Households can also be resourceful entrepreneurs. They don't just repeat their cycle of work and rest every day. They are looking for variety - new jobs, new food, new places to stay. Every time you do something new, you step into the unknown. In this sense, you are also an entrepreneur.

Entrepreneurship is so important that it is sometimes referred to as the fourth factor of production. However, such a comparison is not entirely valid. Unlike labor, capital and natural resources, entrepreneurship is imperceptible and immeasurable. Despite the fact that entrepreneurs in the market are rewarded for their efforts, we cannot talk about the price of a “unit of entrepreneurship”; there is no such unit. Also, unlike human resources that age, machines that wear out, and natural resources that can be depleted, the inventions and discoveries of entrepreneurs are not consumed as they are used. If we once created a new product or concept, such as a transistor, a toothpaste tube or a new form of business, then we will not have to re-create this knowledge (although, of course, it can be replaced by other, even better ideas). In short, it is much more convenient to regard entrepreneurship as a process of finding the best way to combine the three main factors of production than to regard it as a separate fourth independent factor.

Who should do what work: social division of labor.

The question of what and how to produce arises even for a person living in isolation. Robinson Crusoe had to decide whether to fish or hunt birds, and if he was engaged in fishing, then he had to decide what to use - a net or a fishing rod. Unlike Robinson's problems, economic questions about who and what should produce exist only in human society, and this is one of the reasons that economics is considered a social science.

The question of who and what kind of work should be done is related to the organization of the social division of labor. Can everyone be independent — a farmer in the morning, a tailor — in the afternoon, and a poet — in the evening? Or should people cooperate - work together, exchange goods and services, and specialize in different jobs? Economists answer this question on the basis that cooperation is more efficient. It allows any given number of people to produce more than if each of them worked alone. Three things make cooperation valuable: teamwork, learning by doing, and comparative advantage.

Let's look at collaboration first. A classic work on this topic uses the example of workers unloading bulky bales from a truck. The bales are so large that one worker can hardly drag it on the ground, or cannot move the bale at all without unpacking it. Two people working independently would have to spend several hours unloading. However, if they work together, they can easily lift all the bales and stack them in the warehouse. This example shows that even when everyone is doing the same job that doesn’t require any special skills, teamwork yields good results.

The second reason for the usefulness of cooperation is when you need to do different jobs using different skills. In a furniture factory, for example, some workers operate the production equipment, others work in the office, and the rest buy materials. Even if all workers start out with the same ability, each of them gradually improves his ability to do some kind of work, which he often repeats. Learning by doing, therefore, turns average-productivity workers into specialists, resulting in a highly productive team.

The third reason for the need for cooperation comes into force when the learning process develops different skills. It applies to a situation where workers start production with different levels of talent and ability. There is a division of labor according to comparative advantage. Comparative advantage is the ability to do work or produce a product at a relatively lower opportunity cost.

Let us illustrate the principle of comparative advantage with an example. Suppose two clerks, Bill and Jim, have a contract to send a large number of letters. Jim is an agile fellow. He can print a letter in 5 minutes, inscribe and seal an envelope in 1 minute. Working alone, he can finish ten letters an hour. Bill is a mess. It takes him 10 minutes to type a letter and 5 minutes to get it ready for dispatch. As a result, we have:

Without cooperation, two workers would have a productivity cap of 14 letters per hour. Can they improve the business by moving to cooperation? It depends on who will do what work. One possible idea is for Jim to type all the letters while Bill will seal all the envelopes. But, at a speed of 1 letter in 5 minutes, they will only issue 12 letters per hour, which is worse than the result of the previous uncooperative labor. Instead, they must divide the work according to the principle of comparative advantage. Even if in absolute terms, Bill does not print well, he still has a comparative advantage in his job because he has a lower opportunity cost. Every 10 minutes he spends on typing a letter is for him equivalent to writing two envelopes (5 minutes each). For Jim, every 5 minutes he spends on typing a letter can be used to label 5 envelopes (one minute for each). Thus, for Bill, the opportunity cost of printing one letter is a (gone) missed opportunity to inscribe two envelopes, while for Jim the opportunity cost of printing one letter is a lost opportunity to inscribe five envelopes.

Because Bill sacrifices fewer pre-printed and sealed envelopes per letter, the Comparative Advantage Principle says that Bill must type all the time. At the same time, Jim can spend 45 minutes an hour typing nine letters, and the last 15 minutes of every hour writing envelopes for all 15 letters both typed. By specializing in accordance with our principle, two workers can increase their cumulative output to 15 emails per hour, the highest point of their cumulative productivity.

In this example, the principle of comparative advantage points the way for the efficient division of labor between people working side by side together. This principle has broader applications. It can be applied in connection with the division of labor between firms or government agencies. And, perhaps most importantly, comparative advantage applies to the division of labor between countries.

In fact, the very first application of this idea was the sphere of international trade (see section "1.1. Who said? Who did?"). Today, comparative advantage remains one of the most important motivations for mutually beneficial cooperation, both at the enterprise level and globally.

Today, comparative advantage remains one of the main motives for mutually beneficial collaboration both in the same workplace and around the world.

The principle of comparative advantage is easy to apply at any scale, if you remember that it is based on the concept of opportunity cost. Suppose there are two types of work, A and B, and two production units (individuals, firms, countries), labeled X and V, each capable of doing both types of work, but not equally well. Consider first what the opportunity cost of producing a unit of work A, expressed in terms of the number of units of work B, that can be done in the same time and with the same resources, is for X. Let us find out a similar relationship for V. A production unit with a lower opportunity cost of doing work A has a comparative advantage in this work. To check, we find what are the alternative costs of each production unit performing work B, expressing these costs in the number of units of work A that could be produced in the same time from the same resources instead of unit B. The one who has the lowest alternative cost of production unit B, has a comparative advantage in this production.

WHO SAID? WHO DID?
David Ricardo and the theory of comparative advantage

David Ricardo was born in London in 1772, the son of an immigrant, a member of the London Stock Exchange. Having received a rather haphazard education, at the age of 14, Ricardo started doing business with his father. In 1793, Ricardo married and began an independent business life. These years were marked by war and financial instability. The young Ricardo earned a reputation for being very shrewd and intelligent and made a quick career.

In 1799, Ricardo read A. Smith's The Wealth of Nations and became interested in political economy (as economics was then called). In 1809, his first works on economics were published. It was a series of newspaper articles "On the High Price of Gold," which became a famous pamphlet within a year. Several other short works have increased his popularity in this area. In 1814 he retired from business to devote his time to political economy.

The main work of Ricardo was the book "Principles of Political Economy and Taxation", first published in 1817. This work contains, among other things, the first ever formulated principle of comparative advantage for international trade. Using a clear numerical example, Ricardo showed why it is profitable for England to export wool to Portugal and import wine in return, even if both of these products can be produced in Portugal with less labor; it is beneficial to both countries, as long as wool production in England is relatively cheap.

But international trade is just one of the themes of Ricardo's Principles. The book contains all of economic theory in its then state, from the theory of value to the theory of economic growth and evolution. Ricardo believed that the economic system was moving towards a future "steady state". At this stage, economic growth should stop, and the level of wages should drop to the minimum level sufficient for living. This gloomy point of view, as well as the equally pessimistic views of a contemporary of Ricardo, Thomas Malthus, gave political economy a reputation as a "dark science."

Ricardo's book had a huge impact on the minds. For more than half a century after its appearance, most of the economic works published in. England, consisted of explanations and commentaries on Ricardo's work. Economists as diverse as the socialist revolutionary Karl Marx and the defender of liberal capitalism John Stuart Mill have used Ricardo's theories as their starting point. Even today, the "neo-Ricardians" and "new classics" draw inspiration from the writings of Ricardo.

Who to make goods for: positive and normative economics

The benefits of collaborative work and learning in production, as well as the principle of comparative advantage, mean that people can produce more efficiently through cooperation than if they were each working in isolation. But cooperation means another question arises: for whom is all this being done? The distribution of the product among the members of society can be considered both in terms of efficiency and in terms of fairness.

Distribution efficiency. First, consider a situation in which production has already taken place and the quantity of products is fixed. For example, suppose thirty students sit on a bus to go to a soccer game. Packed breakfasts await them on chairs. Half of the bags are filled with meat sandwiches and ginger beer, the rest of the bags are fish sandwiches and Coca-Cola. What happens when the students open the packages? They do not immediately eat what they get. They start exchanging. Some exchange sandwiches, others drink. It is possible that someone's preferences will remain dissatisfied. However, this exchange will improve the situation of at least a few people. In any case, no one will get any worse. If a student does not want to change with anyone, he can eat what he was given.

This example shows that our question is "for whom?" has a lot to do with efficiency. The distribution of any given quantity of good can be improved through exchange, as a result of which the preferences of several people will be more fully satisfied. As long as the exchange of existing goods is possible, such that some people can satisfy their desires without harming other people, the efficiency in distribution can be improved even if the total amount of goods remains the same.

Incentives and Effectiveness. Efficiency in distribution and efficiency in production are two aspects of the general concept of economic efficiency. Taking both aspects into account, it turns out that the relationship between distribution and efficiency is not limited to those cases in which the total amount of goods is constant. This is the case because distribution rules affect the behavior of the subjects of production. For example, the supply of inputs depends on the distribution rules, because most people make a living by selling their labor and other factors of production to commercial firms, and the amount of these factors they supply depends on the amount of the "reward" promised to them. distribution rules affect entrepreneurial incentives Some people can work hard to find new methods of production, even if they do not expect material rewards for it, but not all people are.

Equity in distribution. Efficiency is not the only issue when deciding who to produce goods for. We may also ask if the distribution is fair and fair. In practice, the issue of equity often dominates discussions about distribution. According to one very common view, equality is the basis of justice. This concept of justice is based on the idea that all people, by the very fact of belonging to humanity, deserve to receive a portion of the goods and services produced by the economy. There are many variations on this theory. Some believe that all income and wealth should be shared equally. Others believe that people are entitled to the "minimum necessary" level of income, but that any surplus above this level should be distributed on the basis of already different standards. There is also a perception that certain goods - services, food and education - should be distributed equally, while other goods may not be equally distributed.

An alternative point of view, which has many adherents, is that justice depends on the manner in which a given distribution mechanism operates. From this point of view, certain principles must be respected, such as the right to private property and the absence of racial and gender discrimination. If these principles are respected, then any distribution resulting from them is considered acceptable. Equality of opportunity, from this perspective, is more important than equality of income.

Positive and Normative Economics. Many economists draw a clear line between efficiency and equity Discussions about efficiency are seen as part of positive economics that deals with facts and real dependencies. Discussions about fairness are part of normative economics, that is, the branch of science that makes judgments about whether particular economic conditions and policies are good or bad.

Normative economics is not only concerned with the issue of equity in the distribution of a product. Value judgments are also possible about the remaining three main choices each economic system makes: in deciding what to produce, is it fair to allow the production of tobacco and alcoholic beverages while at the same time banning the production of marijuana and cocaine? When making a choice of “how to produce,” is it possible to allow people to work in hazardous or harmful conditions, or should work under these conditions be prohibited? When deciding who will do what work, is it fair to restrict access to different types of work based on age, gender, race, or union membership? Regulatory issues span across all facets of the economy.

Positive theory, without proposing any value judgments, focuses on the processes by which people receive answers to four basic economic questions. This theory analyzes the action of the economy, the influence of certain institutions and political actions on the economic system. Positive science traces connections between facts, looks for measurable patterns in ongoing processes.

Most economists consider positive theory to be their main and main occupation; but normative considerations still influence the development of positive science. The most significant influence is carried out in the field of choice of topics that are recognized as particularly important for research. An economist who considers excess unemployment to be an injustice will of course begin to study this problem; if a scientist sympathizes with victims of discrimination, then he can also do research on this topic. In addition, normative views often influence considerations about the truthfulness of information, and so on. At one time, it was believed that purely positive economics could develop completely independently of normative judgments of value and fairness. All disputes can be resolved in positive terms, based on reference to objective facts. Today this point of view is gradually losing its popularity. However, it remains important that most major economic problems, especially those pertaining to government policy, have both a positive and a normative component, and it must be understood that each of these components influences our thinking.

ECONOMIC ELECTION COORDINATION

In order for the economy to function, it must have some way of coordinating the choices of millions of people about what to produce, how to produce, who should do what work, and for whom the product is produced. This section presents two modes of coordination: a spontaneous order in which individuals adapt their actions to conditions based on information and stimulus: their immediate environment; the second is a hierarchy in which individual actions are subordinated to the instructions of a central authority.

Non-economic example

Let's start with a non-economic example. Everyone had to go to the supermarket and stand in line at the checkout. In such a situation, both you and other buyers want their turn to come up as soon as possible with this goal in mind, let's ask ourselves: how should the actions of buyers be coordinated? How to avoid a situation in which some queues will be very long, while some cashiers will have to wait

ways is to distribute all customers in certain queues. The store can use a standard rule: customers whose names start with a letter in the range from A to D enter queue 1, customers "E - I" enter queue 2, and so on. Or, instead, the store might hire a dedicated clerk to assign customers to different queues. Both of these examples show how the principle of hierarchy works, but supermarkets don't really work that way. They allow buyers to make independent decisions about which queue they should get up in and the buyers use the information obtained from their own observations. When you walk to the checkout line in a self-service store, you are looking for the shortest lines first. Then you continue your reasoning, based on the fact that some customers have full carts, while others buy one or two items. Finally, you make a decision and get into the queue that you think will move the fastest. If you are mistaken and other queues are advancing faster than you expected, then you can move to another checkout. This approach to problem solving gives us an example of a spontaneous order. It is spontaneous, since buyers make independent decisions based on their immediate surroundings; this is exactly the order, in the sense that as a result, all the queues are approximately the same. The queues leveled off, although none of the customers had the goal of aligning the queues, everyone just really wanted to get out of the store as soon as possible.

Spontaneous order in the markets

In economic theory, the main example of a spontaneous order is the coordination of decisions in the process of market activity. The market is any interaction that people enter into to trade with each other.

Some markets have formal rules and operate in a specific location, such as the New York Stock Exchange. Other markets, such as oral information systems through which babysitters seek out people who need their services, are decentralized and informal. Organizationally, the spectrum of modern markets is very wide: wholesale and retail markets for consumer goods; world markets for thousands of goods and services. Despite their wide variety of forms, all markets have one thing in common: they provide information and incentives that people need to make decisions.

Just as buyers need information about the length of queues in order to coordinate their actions, market participants need information about the rarity and alternative cost of various goods and factors of production. Markets convey information primarily in the form of prices. If a commodity or factor of production becomes more scarce, then its price rises. Rising prices give consumers a signal to save this. Suppose, for example, that the discovery of a new way of using platinum has brought new buyers into the market. Platinum is becoming rarer than it used to be in relation to skyrocketing demand. Competitive struggle for this resource leads to an increase in its price. This fact carries a "message": it is necessary to save platinum where possible, and in addition, it is necessary to increase the production of platinum. Or, conversely, suppose the new technology has lowered the cost of producing platinum. This information is instantly disseminated in the market in the form of a lower price. In this case, people increase the use of platinum, and the producers of this metal will transfer part of their resources to the production of other, more necessary goods.

In addition to knowing how to make the best use of a resource, people also need incentives to act on this information. Markets, again, with the help of prices, provide powerful incentives for the sale of goods and productive resources exactly where this sale will take place at the highest price; price incentives also make people want to buy goods at low prices. Profit considerations are forcing managers to improve production methods and develop products that meet customer needs. Workers who work where they are most productive and do not pass up new opportunities receive the highest wages. Consumers who are well informed and spend their money prudently live more comfortably on a given budget.

Adam Smith, often referred to as the father of economics, saw the attainment of the spontaneous order in the market as the foundation of prosperity and progress. best of all (see section "1.2. Who said? Who did?"). To this day, understanding the enormous importance of markets as a means of coordinating elections remains a core feature of economic thinking.

Hierarchy and power

Markets are important, but not the only means of economic coordination. The most important examples are decisions made within private firms and government agencies.

In a hierarchical system, order is established not through the spontaneous actions of isolated individuals, but through directives that managers direct to their subordinates. Prices usually do not play a big role in the transmission of information. Instead of prices, various data, reports, instructions and rules apply. Incentives such as bonuses and promotions work on subordinates, but these bonuses have little to do with market prices. For employees, the main incentive for subordination to managers is the fact that they have agreed to this subordination as a condition of their entry into the organization.

Markets and hierarchies in modern economic theory

Although business firms and government agencies are internally organized as hierarchies, they communicate with each other in markets. Thus, markets and hierarchies play complementary roles in the implementation of economic coordination. Some economies are based primarily on the market, while others are based on hierarchy. For example, in centrally planned systems such as in the former USSR, central authority is of particular importance. Market systems such as the United States are largely spontaneous. But no economy uses only one method of coordination. Both approaches are widely studied in both macro and microeconomics.

Microeconomics focuses primarily on the market linkages between households, firms and government agencies — how prices for goods and services are set and how these prices change in response to market conditions. In recent years, however, microeconomics has begun to focus more on the often hierarchical decision-making process within households, firms and institutions. This has led to a new understanding of how these economic units interact in markets.

In macroeconomics, markets are equally important. Unemployment theories require an understanding of how labor markets operate, while inflation theories look at changes in the average price level of all goods in services sold in markets. Money interest rates, and other aspects of financial markets also fall within the purview of macroeconomics. But hierarchies also figure in this theory. The focus here is on federal government agencies that determine government spending, taxes, and monetary policy.

In short, no matter what branch of economics we turn to, everywhere we face the problem of coordination. To understand the essence of this problem means to understand the complementary role of markets and power, spontaneous order and hierarchy.

1.2. WHO SAID? WHO DID?
Adam Smith on the "invisible hand"

Adam Smith is considered the founder of economics as an independent science, although he wrote only one book on this subject, entitled The Wealth of Nations. The book was published in 1776, when A. Smith was 53 years old. His friend David Hume found the book so difficult to understand that, in his opinion, it could hardly have many readers. But Hume was wrong - people have been reading it for 200 years.

The wealth of a nation, from Smith's point of view, was not the result of the accumulation of gold or silver, as many theorists of the time believed. Rather, this wealth came from the activities of ordinary people working and trading in free markets. According to Smith, the most interesting feature of the wealth produced by the market economy is that it is not the result of some organized plan, but the unforeseen result of the actions of many people, each of whom in the marketplace strives for their own prices. Smith writes:

“We expect to receive our lunch, not because the butcher, brewer and baker are supportive of us, but because they care for their own benefit ... Each individual is constantly making efforts to find the most” beneficial use of whatever capital he disposes ... In an effort to extract from this production the product of the greatest value, he pursues only his own goal, and in this case, as in many others, he is led by an invisible hand, leads to a result that has nothing to do with his intentions ”, ( "The Wealth of Nations", ch. 2).

Economics as a science has developed in many ways over the past two centuries, developing and supplementing the ideas laid down in the book by A. Smith. The idea of an “invisible hand,” market incentives that direct people to benefit everyone, remains Smith’s most significant contribution to economics.

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Introduction

1. Market price

2. The law of demand

3. The law of supply

4. Equilibrium price

5. Individual competition

6. National competition

Introduction

The market is a collection of transactions for the purchase and sale of goods and services. Everyone enters into such transactions on a daily basis, when, for example, buys groceries in a store or pays for travel on public transport, buys a ticket to a cinema or to a stadium. If we bear in mind the territorial boundaries of this phenomenon, then they distinguish:

a) local (within a village, city, region);

b) national (internal)

c) world markets.

The role and function of the market can be correctly understood if we consider it within the framework of a broader system - the commodity-market economy. It consists of two subsystems:

a) commodity production

which are reunited using forward and backward connections.

The initial link in the overall system - the production of goods - has a direct impact on the market in several ways:

In the industrial sphere, useful products are constantly being created, which then enter the market exchange;

In the production itself, the expected income of market participants is created;

By virtue of the social division of labor, on which commodity production is based, the need for the very market exchange of products is created.

In turn, the market has an opposite effect on the process of creating goods. Reverse economic links constitute the special functions of the market.

The first function is that the market integrates (connects) the spheres of production and consumption. Without a market, commodity production cannot serve consumption, and the area of consumption will find itself without goods that satisfy the needs of people.

Another function: the market plays the role of the main controller of the final production results. It is in the market exchange that it is directly revealed to what extent the quality and quantity of the created products correspond to the needs of the buyers. In addition, the market conducts, so to speak, an exam in economics: for sellers - is it profitable or unprofitable to sell goods, for buyers - is it ruinous or profitable to acquire them?

Finally, an important function of the market is manifested in the fact that market exchange serves as a way to fulfill the economic interests of buyers and sellers. The interrelation of these interests is based on the principle formulated by A. Smith: "Give me what I need, and you will get what you need ...". This implies:

a) exchange of usefulness necessary to each other

b) the equivalence of a market transaction.

1. Market price

The market price is the actual price that is set in accordance with the supply and demand of goods. Depending on the different conditions for the sale and purchase of goods and services, there are different types of prices. They can be classified into certain main groups:

1. Taking into account the methods of regulation, such types of prices are distinguished.

Free prices. They depend on the state of the market and are established without government intervention, on the basis of free agreement between the seller and the buyer.

Negotiated, or contractual, prices. Market participants establish them by mutual agreement until the moment of purchase and sale of goods. The contract may indicate not the absolute values of prices, but only the upper and lower levels of their changes.

Adjustable prices. For certain groups of goods, the state sets an upper price limit, which is prohibited to exceed.

In a market economy, such pricing applies to vital goods and services (strategic raw materials, energy carriers, public transport, essential consumer products).

Government fixed prices. State bodies fix such prices in planning and other documents. Neither manufacturers nor sellers have the right to change them.

2. Depending on the forms and spheres of trade, the following types of prices are distinguished.

Wholesale, for which large masses of goods are sold in wholesale. In our country, manufacturing enterprises sell their products to other enterprises or resellers at these prices.

Retailers by which retail products are sold to consumers.

Tariffs for services - prices (rates) that establish the level of payment for utilities and household services for using the telephone, radio, etc.

3. Exchange and auction prices are formed in different specific forms of markets related to the type of free market.

4. World market prices - prices that:

a) actually installed on the goods of this group on the world market

b) recognized by international trade organizations for a certain period.

By the way, in countries with an open market economy, knowledge of world prices is very important for the correct orientation in the economic activity of manufacturers of goods, resellers and buyers. Changes in prices in the world market strongly affect domestic prices in a particular country. To an even greater extent, the level of world prices determines the profitability or loss of foreign trade.

Most of the prices considered here, to one degree or another, have a common property - they change under the influence of the conjuncture (a combination of different circumstances) of the market. In turn, prices naturally affect the economic situation of sellers and buyers, their interest in buying and selling goods.

2. The law of demand

Demand is a solvent need, that is, the amount of money that buyers can and intend to pay for some product they need. Demand is influenced by a number of market factors, such as consumer income, tastes and preferences. So far, let us consider only the quantitative dependence of demand on the price level. Suppose, in some local market, people will buy a different number of apples if their price rises as shown in the demand scale (Table 1).

Table 1. Scale of demand

The demand scale shows how many goods can be bought at different prices for a given period. Analysis of this scale makes it easier to identify the dependence of demand on price.

Such a quantitative dependence is presented in the form of a graph (Fig. 1). Here is the same conventional example of selling apples in the local market. Apple prices are plotted on the ordinate. The abscissa shows the number of apples for which demand is presented. The C1-C2 curve on the graph shows that when the price rises, the purchasing power of people decreases and, conversely, when the price decreases, the demand for food increases.

Rice. 1. Demand curve

The degree of quantitative change in demand in response to price dynamics characterizes the elasticity (or inelasticity) of demand. The elasticity of demand means the degree of change in demand (the "sensitivity" of its volume) depending on the price. The measure of this change is the coefficient of elasticity of demand (Kс):

Elastic demand occurs when the amount of demand changes by a greater percentage than the price. The value of the price elasticity of demand is always a negative number, because the numerator and denominator of a fraction always have different signs.

Inelastic demand manifests itself if the purchasing power needs are not sensitive to price changes. For example, no matter how the prices for salt rise or fall, the demand for it remains unchanged. Knowledge of the coefficient of elasticity of demand is important for predicting the volume of demand of the population when the level of market prices changes.

3. The law of supply

The offer is the sum of goods that sellers are willing to sell at different dynamics of the market price.

Suppose there are apples in a local market. As the price increases, the number of apples offered for sale will increase. This is illustrated by a conditional example in the sentence scale (Table 2).

Table 2. Supply Scale

The supply scale shows how many goods sellers are willing to sell at different prices. The given figures reveal the dependence of the offer on the price.

The supply law characterizes the following functional dependence of the supply (P) on the price: P = F (U). The higher the price, the more the supply of products from the sellers grows. And vice versa: the lower the price, the lower the offer.

This relationship is clearly shown in the graph (Fig. 2). It is illustrated again by the example of selling apples. The ordinate is the price of apples, and the abscissa is the number of apples that sellers are willing to sell. The P1-P2 curve on the graph shows how, with an increase in price, manufacturers increase the volume of sales, and, conversely, their supply decreases with a decrease in price.

Rice. 2. Supply curve

The degree of change in the volume of supply in response to an increase in price characterizes the elasticity of supply. The elasticity of supply is understood as the degree of its change depending on the price dynamics. The measure of this change is the coefficient of elasticity of supply (Kp):

The offer (for the price) can be elastic and inelastic. This distinction is especially important for product manufacturers who predict the elasticity of new products in advance.

The supply becomes elastic when its value changes by a greater percentage than the price. As the experience of Western countries shows, the coefficient of elasticity of supply - under the condition of equilibrium of prices and over a long period - tends to increase (that is, an increase in prices by a certain amount causes an increase in production to a somewhat greater extent).

Supply is inelastic if it does not change with an increase or decrease in prices. This is typical for many products in the short run. For example, elasticity is low for perishable foods that cannot be stored in large quantities (say, strawberries). In addition, supply is more inert (compared to demand). After all, it is quite difficult to switch production to the release of new products, to redistribute resources in this regard to change the amount of manufactured goods. Therefore, the knowledge of the dynamics of the coefficient of elasticity of supply is useful for predicting the volume of production depending on changes in prices.

Thus, we became aware of the direct dependence of supply and demand on the market price. This dependence is manifested in the regulating influence of prices on the ratio of supply and demand, and, therefore, on the economic position of buyers and sellers. We have found two options for such regulation, in which one side of a market transaction wins and the other loses.

The first option: the market price rises, and this leads, on the one hand, to a decrease in demand and, on the other hand, to an increase in supply. As a result, producers and sellers gain economic benefits (they increase the output and sale of goods, receiving more income).

The second option: the price of goods decreases, which contributes, on the one hand, to the expansion of demand and, on the other hand, to a reduction in supply. As a result, buyers benefit economically (they acquire more goods for the same amount of money).

But there is also an inverse relationship between the market price and supply and demand. First, the greater the demand, the higher the price, and vice versa (with a decrease in demand, the price decreases). Secondly, the larger the supply, the lower the price, and vice versa (as the supply volume decreases, the price increases).

4. Equilibrium price

Let's return to the previously considered dependences on the supply and demand prices. If we combine these curves at the same time, then at the point of intersection P we get an equilibrium of supply and demand (Fig. 3).

This equilibrium point indicates the unity of the economic interests of buyers and sellers.

If we lower the perpendicular from the point P to the abscissa axis, then at the point Кр we determine the equilibrium quantity. It shows the amount of commodity mass (in this case, the number of apples), which satisfies the wishes of buyers and sellers.

The projection of point P onto the ordinate - point C "determines the equilibrium price. This is the level of the market price that is equally acceptable for the participants in a market transaction.

Rice. 3. Establishing an equilibrium price

All of the above indicates that the equilibrium price and equilibrium quantity have the following extraordinary properties.

1. There are no more and no less goods on the market than are needed for human consumption. All the costs of producing goods are paid off by selling them at an equilibrium price. Consequently, the achieved equilibrium testifies to the greatest economic efficiency of the current market situation. Nobel laureate French economist M. Allay derived theorems with the following fundamental propositions: "... any equilibrium situation of a market economy is a situation of maximum efficiency, and, conversely, any situation of maximum efficiency is an equilibrium situation of a market economy."

2. At the point of equilibrium, the greatest social effect is also expressed. For the equilibrium price, the consumer acquires the marginal (for his income) amount of utilities.

3. The market does not reveal either an excess of goods (a quantity that is superfluous for sale with a given volume of income of the population), or a deficit (shortage) of goods.

In conclusion, the question arises: is there an internal force in the market itself that is capable of overcoming the non-equilibrium state of the market (excess of demand over supply, or vice versa) and generate a tendency to sell goods at an equilibrium price?

Competition (lat. Concurrere - to compete) - rivalry between participants in the market economy for the best conditions for the production, purchase and sale of goods. Such an inevitable collision is generated by objective conditions: the complete economic isolation of each market entity, its complete dependence on the economic environment and confrontation with other applicants for the greatest income. The struggle of private commodity owners for economic survival and prosperity is the law of the market.

To better understand competition, it must be compared to a monopoly. The fact is that both one and the other type of relationship between market participants are asymmetric. The opposite of their properties is rooted in completely different parameters (indicators) of the state of the market. We will get a clear idea of this in table. 4, which characterizes the position of sellers of goods.

Table 3. Competition and monopoly

From the materials table. 3 it is easy to draw the following conclusion. Competition is the normal state of the market. Can it really be called a natural situation when the entire market space is captured by one seller, who does not allow anyone to trade and dictates the prices of the goods he sells himself?

Competition can be classified on several grounds:

a) by the scale of development

b) by nature

c) by the methods of rivalry.

In terms of the scale of development, competition can be:

individual (one market participant seeks to take "his place in the sun" - to choose the best conditions for the sale and purchase of goods and services);

local (conducted among the commodity owners of a certain territory);

sectoral (in one of the market sectors there is a struggle to obtain the highest income);

intersectoral (rivalry between representatives of different market sectors for attracting buyers to their side in order to generate more income);

national (competition between domestic commodity owners within a given country);

global (the struggle of enterprises, economic associations and states of different countries in the world market).

By the nature of development, competition is subdivided into:

1) to a free

2) adjustable

According to the methods of conducting, market rivalry is divided:

1) on the price (the market positions of rivals are undermined by lower prices)

2) non-price (victory is won by improving product quality, better customer service, etc.)

Now let's take a closer look at the nature of the development of market confrontation.

Free competition means, firstly, that there are many independent commodity owners on the market who independently decide what to create and in what quantities. Secondly, no one or anything restricts access to the market and the same exit from it for everyone. This presupposes the opportunity for every citizen to become a free entrepreneur and apply his labor and material resources in the branch of the economy that interests him. Buyers, on the other hand, should be free from any discrimination (impairment of rights) and be able to buy goods and services in any market. Third, enterprises do not participate in any way in controlling market prices.

Free competition naturally corresponds to the period of classical capitalism. It manifested itself more fully, perhaps, only in England and only in the 19th century. Free competition in modern conditions is a rare phenomenon. For example, in highly developed countries such a phenomenon can be found, for example, in the securities market and in the field of market competition among farmers.

In the XX century. new forms of market rivalry were developed - state-regulated competition and the confrontation of monopolies.

At the initial acquaintance with competition, it can be assumed that free rivalry introduces complete disorganization and disorder into market relations. To a large extent, this corresponds to the spontaneous development of the market. Meanwhile, in all existing types of competition, the written and unwritten rules of market rivalry are observed to a greater or lesser extent.

5. Individual competition

price demand supply competition

As you know, a feature of free competition is that sellers and buyers are small owners. None of them, of course, can single-handedly seize the market space and set their own price for everyone. This decisive circumstance predetermines the rules of the competitive "game" that lead the opponents to victory or defeat.

First rule. Commodity owners should take into account the level of the equilibrium price (reflecting the equality of supply and demand) as a standard (lat. Notmatio - ordering) of rational, reasonably justified management. If, for example, the seller has set a very high price for his products, exceeding the equilibrium level, then he will inevitably face an overstocking of products that have not found a sale. Then, after some time, you will have to reduce the price or even sell the goods at prices that are acceptable to buyers. And this comes with unforeseen losses.

Second rule. In order, as they say, to "outwit" the equilibrium price, the commodity producer tries to spend less resources per unit of output and to create goods at a lower individual price. However, he sells these products at an equilibrium price common to all. As a result, additional income is generated in the form of the difference between the equilibrium and individual prices.

Brave and far-sighted entrepreneurs, risking their property, make discoveries of great economic importance: they invent and introduce new equipment and technologies, find more efficient forms of labor and production organization, and methods of economical use of resources. This paves the way for all to scientific, technical and economic progress. Nobel laureate F. Hayek (Great Britain) made an important generalization: societies relying on competition are more successful than others in achieving their goals. Here is a conclusion remarkably confirmed by the entire history of civilization. Competition shows how you can make things more efficiently.

Third rule. When the struggle intensifies, the rivals resort to the method of price competition. If funds allow, then sometimes dumping is used - selling products at extremely low (as they are called, "junk") prices. A. Kuprin told about such rivalry in his novel "The Pit". Two new shipping companies arose, and they, along with the old ones, fiercely competed with each other. In competition, they went so far as to reduce the prices for flights from seventy kopecks for third-class passengers to five, three and even one kopeck. Finally, exhausted in an unbearable struggle, one of the shipping companies offered all third-class passengers a free pass. Then his competitor immediately added half a loaf of white bread to the free pass.

Having achieved the ruin of the opponent, the winner, as a rule, restores the previous price and buys up the loser's property.

List of used literature

1. Alla M. Economy as a science. M., 1995.

2. Dolan E.J., Lindsay D.E. Market: microeconomic model SPb., 1992. Ch. 2, 3, 4.

3. Livshits A.Ya. Introduction to the market economy. M., 1991. Lectures

4. Marx K. Capital. T. 1. Ch. 1-3 // Marks K., Engels F. Soch. 2nd ed. T. 23 .:

5. Mill J-S. Foundations of Political Economy. M., 1980.T. 3.

6. Heine P. Economic way of thinking. M., 1991. Ch. 4.

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Topic 1. Introduction to microeconomics

1.1. The emergence and development of the economy as a science
1.2. Subject of economic theory, micro- and macroeconomics. The value of studying microeconomics.
1.3 Methods of economic research.

Economics schools:

1) mercantilists;
2) physiocrats;
3) classical political economy;
4) Marxism;

Economics schools:

5) marginalism;
6) Keynesianism;
7) neoclassical direction;
8) institutionalism;
9) neo-Keynesian direction, etc.

Mercantilism

economic doctrine of the XY-XU11 centuries, whose representatives argued that wealth accumulates as a result of foreign trade, and the sphere of circulation is subject to research. Distinguish between early and late mercantilists.
Early mercantilists identified wealth with gold and silver and put forward the theory of "money balance", proposing to prohibit the export of money from the country, as well as restrict imports, increase the production of gold and silver, and impose high duties on the import of goods.

Mercantilism

The late mercantilists - T. Maine, A. Serra, A. Montchretien, and others - understood the excess of products as wealth, which remained after satisfying the needs of the country, but had to turn into money on the foreign market. The central point of late mercantilism was the "system of trade balance", according to which it was believed that the state becomes the richer, the greater the difference between the sum of the value of exported and imported goods.

Physiocrats

The School of Economics, which was formed in the middle of the XU111 century. do France, moved the issue of the origin of social wealth from the sphere of circulation to the sphere of production, but limited it only to agriculture, counting. That wealth is created only in this industry. The founder of the school of physiocrats was F. Quesnay, and his followers were A. Turgot, P.S. Dupont de Nemours, V. Mirabeau.

Classical political economy

The first representatives of this school were William Petty (1623-1687) in England and Pierre Boisguillebert in France. They attempted to reduce the value of a commodity to labor and took a decisive step towards economic theory, which discovered the source of wealth in the sphere of production. Classical political economy reached its highest development in the works of the English economists Adam Smith (1723-1790) and David Ricardo (1772-1823).

Classification of countries with economies in transition

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WHAT? AS? WHO? FOR WHOM?

Deciding what to produce: opportunity cost

APPLYING ECONOMIC KNOWLEDGE Alternative cost of college tuition

WHO SAID? WHO DID? David Ricardo and the theory of comparative advantage

ECONOMIC ELECTION COORDINATION

Non-economic example

Spontaneous order in the markets

Hierarchy and power

Markets and hierarchies in modern economic theory

1.2. WHO SAID? WHO DID? Adam Smith on the "invisible hand"

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Topic 1. Introduction to microeconomics

1.1. The emergence and development of the economy as a science

1.2. Subject of economic theory, micro- and macroeconomics. The value of studying microeconomics.

1.3 Methods of economic research.

Economics schools:

1) mercantilists;

2) physiocrats;

3) classical political economy;

4) Marxism;

Economics schools:

5) marginalism;

6) Keynesianism;

7) neoclassical direction;

8) institutionalism;

9) neo-Keynesian direction, etc.

Mercantilism

economic doctrine of the XY-XU11 centuries, whose representatives argued that wealth accumulates as a result of foreign trade, and the sphere of circulation is subject to research. Distinguish between early and late mercantilists.

Early mercantilists identified wealth with gold and silver and put forward the theory of "money balance", proposing to prohibit the export of money from the country, as well as restrict imports, increase the production of gold and silver, and impose high duties on the import of goods.

Mercantilism

Physiocrats

Classical political economy

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POPULAR SECTIONS

APPLYING ECONOMIC KNOWLEDGE
Alternative cost of college tuition

WHO SAID? WHO DID?
David Ricardo and the theory of comparative advantage

1.2. WHO SAID? WHO DID?
Adam Smith on the "invisible hand"