Smith, Ricardo, Marx, Marshall, Keynes, Hayek, Friedman, and major schools of thought.
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- What does Adam Smith mean by the invisible hand?
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Self-interest of individuals leads to efficient market outcomes without central coordination- What mechanism did Adam Smith identify as increasing productivity?
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Division of labor (specialization)- When was The Wealth of Nations published?
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1776- What motivates economic activity according to Smith?
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Self-interest, not benevolence from others- What principle explains why countries benefit from trade despite lacking absolute advantage?
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Comparative advantage (relative cost differences matter)- What does Ricardo's law of rent describe?
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Rent arises from differences in land quality and location- According to Ricardo's labor theory of value, what determines goods' value?
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The amount of labor required to produce them- What is Ricardo's iron law of wages?
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Wages tend toward subsistence level as population grows- In Marxist theory, what is surplus value?
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Difference between value produced by labor and wages paid to workers- What did Marx call the struggle between workers and capitalists?
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Class conflict (or class struggle)- What is Marx's theory of historical development called?
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Historical materialism (material conditions determine social structures)- According to Marx, what is the ultimate fate of capitalism?
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Collapse due to internal contradictions and revolutionary transformation- What is Alfred Marshall's primary methodological contribution?
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Partial equilibrium analysis (examining individual markets in isolation)- What economic measure did Marshall develop to capture quantity responsiveness to price changes?
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Elasticity of demand- What is consumer surplus according to Marshall?
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Difference between what consumers are willing to pay and what they actually pay
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