China’s Economic Rise: Deng’s Reforms and Their Impact
Theme II: The Development of the Global Economy
6. The Rise of China
I. Deng’s Reforms
- Household Responsibility System (HRS)
- Introduced in 1978
- A significant, though not complete, abandonment of the collectivization system under Mao
- Farming households were free to dispose of any surplus produce on the open market once production targets were met
- First major reform, setting the stage for other future reforms
- Allowed for an increased role for market forces
- Rural production rose, became self-sufficient in grain
Understanding Economic Systems: Production and Distribution
What to Produce?
The decision of what and how much to produce is an immediate consequence of the allocation of land, labor, and capital. Choosing to produce spacecraft, for example, will surely decrease the production of fridges, televisions, cars, or houses, as resources are scarce. This production decision involves an opportunity cost.
How to Produce?
The answer to this question relates to the choice of production technique. If several techniques exist, the consequence of this choice can be significant
Read MoreKey Concepts in Microeconomics: A Comprehensive Review
Key Concepts in Microeconomics
Indifference Curves and Consumer Choice
- Indifference curves must necessarily have a negative slope: Any point in space to its right includes a greater quantity of at least one of the goods.
- If you give the first 10 purchased units of good 2, the maximum amount of good 2 to which you have access is: (y/p2) + 10.
Market Structures
Perfect Competition
- In perfect competition, a company is in short-term equilibrium if the marginal value product equals the price factor, assuming
Understanding Economic Agents and the Circular Flow of Income
Item 3
Economic theory assumes that, in deciding, people are guided by the principle of economic rationality. Economic Rationality is to choose among the available choices, one that seeks more utility or welfare. Rent represents the value or the price paid for the use of something in a productive use of time. Depending on the productive resource that is generated, the income has different names: Salary if it is earned, the rental if it comes from natural resources, and interest if it stems from the
Read MoreUnderstanding the Economy: Resources, Systems, and Trends
The economy is concerned with the administration or use of existing resources to satisfy the needs of individuals and groups.
Economic Goods
Economic goods are produced to satisfy people’s needs.
Products are materials obtained directly from nature, such as wheat and fish, or manufactured goods like automobiles and clothing.
Tasks that provide services include transporting a person or group, healthcare, and business services.
Resources are limited and may run out. They are bought and sold.
Economic Activities
Read MoreConsumer and Producer Surplus, Utility, and Cost Concepts
Consumer and Producer Surplus
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they pay. When the marginal benefit (MB) exceeds the marginal cost (MC), there is an under-allocation of resources. One of the key characteristics of private goods is rivalry, meaning that when one person buys and consumes a product, it is not available for another person. Increases in price reduce consumer surplus. Consumer surplus is always graphically represented
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