Term
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Definition
Natural Law: all behavior that accorded with the laws of nature was considered to be morally justified, whereas behavior that was “unnatural” was morally wrong.
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Term
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Definition
Hedonism: the belief that it is morally good to pursue pleasure and minimize pain.
Modern idea: Maximizing utility
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Term
| In order, name the 5 eras of the early economists |
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Definition
1. The Greeks & Romans
2. The Scholastics
3. Merchantilism
4. Liberal Precursors to Adam Smith
5. Adam Smith |
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Term
| What was the name of the first economics book ever written and who wrote it? |
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Definition
"Oeconomicus"
by
Xenophon |
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Term
| Define: Isolated exchange |
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Definition
Isolated exchange:
One buyer ~ one seller |
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Term
| In an isolated exchange (or bilateral monopoly) how did they know what the “price” should be, since there was no “going rate” or equilibrium? |
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Definition
| The Greeks used a type of economics that was normative (as opposed to positive economics, which follows a cause and effect model). With normative economics, it’s all a moral judgment call which uses “should” statements. |
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Term
| Aristotle said since there is no idea of what the actual market value is on the goods, then “__________ __ _________” must be accomplished in order to satisfy both parties, which would split the social surplus equally. |
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Definition
Aristotle:
Resiprocity in exchange |
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Term
| Define: Reciprocity in exchange |
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Definition
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Reciprocity in exchange:
trade in goods and services should involve an exchange of equal value for both buyer and seller: each party to the transaction should feel that he received something of more or less equal value to what he gave up. Justice.
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Term
| Define: Aristotle's "Paradox of Value" |
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Definition
Aristotle's "Paradox of Value"
a distinction between use value and exchange value:
Use value is the value of a good in use, i.e., its intrinsic usefulness, (water)
Exchange value is the value of a good in exchange, i.e., the price at which it is exchanged (diamonds)
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