Theory of the Property Rights

Property rights - a combination of human power, sanctioned behavioral relations developing between people on the use of economic goods.

Specification of property rights - the definition of the subject, the object of property and means of granting it, the definition of proprietary rights.

Full "bundle of rights" is composedof 31 elements:

Right of possession 2. Right of use 3. Right of management 4. Right on income 5. Right of the sovereign

6. Right on security 7. Right to transfer of the good in inheritance 8. Right to indefinite possession of good

9. Ban on use by the way doing damage to environment 10. Right to responsibility in the form of recovery

11. Right to the residual character

Property relations - a system of exclusion from access to material and non-material resources.

8 GNP and GDP and other indicators of the national economy.

GNP – GROSS NATIONAL PRODUCT

The GNP is a nation’s total output of goods and services produced by a countru in one year. In obtainingthe value of the GNP, only the final value of a product is counted (e.g. homes but not the construction materials they were built with). The 3 major components of GNP are consumer purchases, government spending, private investment and exports. The formula is thus: C+G+I+X=GNP

GDP – GROSS DOMESTIC PRODUCT

The GDP is monetary value of all goods and services performed in a nation in one year. GDP measures the economic strength of a nation. It is computed by multiplying the quantity of all goods and services by its price. When this is done for all 3 categories, Consumer spending, Government spending and Investments, the results are added to give us the GDP

C+G+I+F=GDP

There are many different purposes: 1- CONSUMER PRICE INDEX (CPI), 2-PRODUCER PRICE INDEX (PPI), 3-GDP price deflator.

9 Cyclical as a pattern of economic development.

A cyclic pattern is one that simply starts over again at the beginning when the last step has finished.

The pattern described would be: deploying-developing-designing-deploying-developing-designing-deploying-developing-designing...

10 The national economy as a system.

National Economy the historically shaped complex of production sectors in a given country, interrelated through the division of labor. The national economy includes the sectors of the production sphere, where material social product is created, and sectors of the nonproduction sphere, where non-material services are performed. Material production is in turn divided into those sectors that produce the means of production (subdivision I of social production) and those sectors that produce consumer goods (subdivision II). The socioeconomic nature of any national economy, as well as its structure and rate of development, is determined by the character of the dominant production relationships in society.

11 Factors of production.

In economics, factors of production are the inputs to the production process. Finished goods are the output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function. There are three basic (AKA classical) factors of production: land,labor, capital. All three of these are required in combination at a time to produce a commodity. In economics, production means creation or an addition of utility. Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods or services. Factors of production may also refer specifically to the primary factors, which are stocks including land, labor (the ability to work), and capital goods applied to production. Materials and energy are considered secondary factors in classical economics because they are obtained from land, labor and capital. The primary factors facilitate production but neither become part of the product (as with raw materials) nor become significantly transformed by the production process (as with fuel used to power machinery). Land includes not only the site of production but natural resourcesabove or below the soil. The factor land may, however, for simplification purposes be merged with capital in some cases (due to land being of little importance in the service sector and manufacturing). Recent usage has distinguished human capital (the stock of knowledge in the labor force) from labor.^[1] Entrepreneurship is also sometimes considered a factor of production.^[2]Sometimes the overall state of technology is described as a factor of production.^[3] The number and definition of factors varies, depending on theoretical purpose, empirical emphasis, or school of economics

12 Concept of Utility: Marshallian Approach.

Both the analysis are based on the assumption that the consumer is rational and he is interested to maximize his total utility. 2) Both the approaches follow the proportionality rule. In one it is between price and marginal utility while in the other it is between price and marginal rate ofsubstitution. *in marshallian utility approach the equilibrium condition for a consumer is :MU_x /MU_y = P_x / P_{y *}in the indifference curve analysis the equilibrium condition for a consumer is :MRS_xy = P_x / P_y. 3) Marshallian analysis states the assumption that MU of a commodity diminishes as the consumer gets more of it ; whereas in the Hick sian analysis, MRS between commodities also diminishes as the consumer purchases more of a commodity.Superiority of Indifference curves analysis : The indifference curve analysis is considered to be a superior approach in the determination of consumer's equilibrium than marshallian utility analysis. The comparison of the 2 analysis is as follows: a) More realistic approach: The Ic curve analysis is more realistic approach to explain consumer behavior than the cardinal utility analysis because the utility analysis assumes "too much" and explains "too little", whereas the indifference curves analysis explains "more and better" with "few and less restrictive" assumptions. B)Cardinal vs Ordinal measurement of utility: Marshall's theory was based on cardinal approach meaning Quantitative , which is that utility could be measured in numbers. Hicks theory was based on ordinal approach meaning Qualitative , which is that utility should be measured in equal, more or less. C) Effects felt: According to Marshall's theory price, income and substitution effects would remain constant. Whereas Hick's theory states that these 3 factorkeep changing , thus it would result in an more perfect outcome on the consumers equilibrium.d) Price effect through changes in real income: Marshall's theory does not measure how real income can be measured . Whereas hick's theory measures the effect of an increase in real income resulting from a fall in the price of a commodity by shifting on to a higher indifference curve and vice versa. E) Giffen Paradox : Marshall theory does not break up the 'price effect' into 'income effect' and 'substitution effect' and thereby it does not show the negative price effect in case of giffen goods. Whereas the Hick's analysis the relative nature of various goods is explained e.g. Inferior and superior. The ic curve divides the 'price effect' into 'income' and 'substitution'. F) Greater scope: Marshallian utility analysis bypassed the issue of interrelated goods i.e. Substitutes and compliments.. Whereas prof Hick's has given a detailed analysis of consumer behavior forrelated goods. G) Marginal utility of money: According to marshall theory MU of money remains constant ; whereas in hicks theory , it varies. Meaning MU of money cannot remain constant , e.g. When a consumer purchasesproducts, he pays for them, hence he departs without his money; thus reduction of money raises its marginal utility, which proves Hick's point of view that M.U. Of money does not remain constant.

12. Marshall is considered to be one of the most influential economists of his time, largely shaping mainstream economic thought for the next fifty years, and being one of the founders of the school ofneoclassical economics. Although his economics was advertised as extensions and refinements of the work of Adam Smith, David Ricardo, Thomas Robert Malthus and John Stuart Mill, he extended economics away from its classical focus on the market economy and instead popularized it as a study of human behavior. He downplayed the contributions of certain other economists to his work, such as Léon Walras, Vilfredo Pareto and Jules Dupuit, and only grudgingly acknowledged the influence of Stanley Jevons himself.

Marshall was one of those who used utility analysis, but not as a theory of value. He used it as a part of the theory to explain demand curves and the principle of substitution. Marshall's scissors analysis – which combined demand and supply, that is utility and cost of production, as if two blades of a pair of scissors – effectively removed the theory of value from the center of analysis and replaced it with the theory of price. While the term "value" continued to be used, for most people it was a synonym for "price". Prices no longer were thought to gravitate toward some ultimate and absolute basis of price; prices were existential, between the relationship of demand and supply.

Marshall's influence on codifying economic thought is difficult to deny. He popularized the use of supply and demand functions as tools of price determination (previously discovered independently by Cournot); modern economists owe the linkage between price shifts and curve shifts to Marshall. Marshall was an important part of the "marginalist revolution;" the idea that consumers attempt to adjust consumption until marginal utility equals the price was another of his contributions. The price elasticity of demand was presented by Marshall as an extension of these ideas. Economic welfare, divided into producer surplus and consumer surplus, was contributed by Marshall, and indeed, the two are sometimes described eponymously as 'Marshallian surplus.' He used this idea of surplus to rigorously analyze the effect of taxes and price shifts on market welfare. Marshall also identified quasi-rents.

Marshall's brief references to the social and cultural relations in the "industrial districts" of England were used as a starting point for late twentieth-century work in economic geography andinstitutional economics on clustering and learning organizations.

Gary Becker (b. 1930), the 1992 Nobel prize winner in economics, has mentioned that Milton Friedman and Alfred Marshall were the two greatest influences on his work.

Another contribution that Marshall made was differentiating concepts of internal and external economies of scale. That is that when costs of input factors of production go down, it is a positive externality for all the firms in the market place, outside the control of any of the firms.^[10]

The Marshallian industrial district[edit]

A concept based on a pattern of organization that was common in late nineteenth century Britain in which firms concentrating on the manufacture of certain products were geographically clustered. Comments made by Marshall in Book 4, Chapter 10 of Principles of Economics^[11] have been used by economists and economic geographers to discuss this phenomenon.

The two dominant characteristics of a Marshallian industrial district^[12] are high degrees of vertical and horizontal specialisation and a very heavy reliance on market mechanism for exchange. Firms tend to be small and to focus on a single function in the production chain. Firms located in industrial districts are highly competitive in the neoclassical sense, and in many cases there is little product differentiation. The major advantages of Marshallian industrial districts arise from simple propinquity of firms, which allows easier recruitment of skilled labour and rapid exchanges of commercial and technical information through informal channels. They illustrate competitive capitalism at its most efficient, with transaction costs reduced to a practical minimum, but they are feasible only when economies of scale are limited.

13. In market economies, economic decisions are made by individuals. The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. Individuals choose how to invest their personal resources—what training to pursue, what jobs to take, what goods or services to produce. And individuals decide what to consume. Within a pure market economy the government is entirely absent from economic affairs.

14.The word “economics” is known to everyone from an early age. But our primary notion of economics mostly empirical, experienced, which forms under the influence of, the mass media, in which it is said about the prices, income, salary, satisfaction need for goods, service that we seem as economics. Actually notion "economics" is polyhedral. It includes the economics) as economic system, economic science and economic theory.

The term "economics" was introduced into inversion by an ancient Greek philosopher Xenophon, who wrote first disquisition of economics. Translating from the Greek "economic" means a science of housekeeping. With development of the exchange, the forming national markets arises necessity in a wide interpretation of the notion "economics" and in 1615 French scientist A. Monkretien introduces in inversion the term "political economy" that in translation from Greek means "art of state management of economy". It was founded on a principle of diligent management, which was developed by experienced way, as a result of generalizations economic practice.

With developing of people’s general knowledge the economic science developing too as science of knowing the laws of economics management. It studies the secrets of the behavior "thinking full-grown matter» - a behavior of individual, companies, branches, society i.e. behavior of the producer and consumer in a process of economic activity, purpose of which is a satisfaction of varied people’s needs.

The Economic science includes:
- A branch economic sciences (the economic industry, transport, agriculture, construction and others);
- functional (the finances, credit, accounting, аудит, statistics, marketing and others);
- interindustry (the economic geography, demography, management and others).

The methodological base of all economic sciences is economic theory as system of scientific explanations to economic people’s activity. It studies the causal relationship and regularity of the economic development processes, economic relations appearing between subjects in the process of their economic activity, enables to forecast the development of the country economics.

The Functions of economic theory are:
- cognitive - reveals itself in studying of the economic laws, the methods of economic activity, without which is impossible all other types of vital activity;
- methodological - is the science of development of the methods, ways scientific instrument, required for investigations all economic sciences;
- practical - is a direct ensuring of economic policy, production management on macro- and мmicroeconomic levels;
- world outlook function - is a forming scientific economic way of thinking.

15.Economists generally recognize three distinct types of economic system. These are 1) command economies; 2) market economies and 3) traditional economies. Each of these kinds of economies answers the three basic economic questions (What to produce, how to produce it, for whom to produce it) in different ways.

In a command economy, the government decides the answers to the three basic questions. It decides what will be made, how they will be made, and who will get them. Recently, pure command economies have usually been communist countries. Good examples today would be North Korea and China.

In a market economy, consumers decide the answers to the three questions. They do this by their choices of what to buy. No one tells companies what to make -- they make whatever they think will sell. If they choose wrong, they go out of business. Most developed economies today are predominantly market economies. The US, Japan and Germany are all market economies.

In a traditional economy, the three questions get answered by referring to tradition -- you make what has always been made, in the way it has always been made, etc. There aren't really any countries whose whole economies are traditional. The closest you could get to this would be Afghanistan or Bhutan -- places where there is little connection to the global economy.

16. Denationalization and privatization. The main stages of the privatization in Kazakhstan. Within the scale of Kazakhstani economy, privatization has some significant features. There was an objective necessity to accelerate the formation of market oriented economic structures, and also to form a critical layer of owners as effective business entities. Some of the decrees issued in the Republic of Kazakhstan, like "On denationalization and privatization" of June 22, 1991 and "On privatization" of 23 December 1995, had become the legal basis for denationalization and privatization. A decree "On denationalization and privatization" defines privatization as a sale of a state property to physical entities as well as to non-governmental and legal entities, which is produced by the will of the state as the owner under the special procedures. The objects of privatization were defined as some special types of public property, for example: public enterprises, institutions, manufacturing and non-manufacturing units, the property companies, stocks and also stakes in the equity capital of the limited liability partnerships, and others The decree "On denationalization and privatization", provided for the following forms of transformation of a state property: property leasing; the purchase of property that has been leased; the repayment of property by the members of work collective; the sale of the property on competition or on the auction; the transformation of the State enterprise into the joint-stock company.

17. Economic methodology is the study of methods, especially the scientific method, in relation to economics, including principles underlying economic reasoning.^[1] In contemporary English, 'methodology' may reference theoretical or systematic aspects of a method (or several methods).

General methodological issues include similarities and contrasts to the natural sciences and to other social sciences and, in particular, to:

· the definition of economics^[2]

· the scope of economics as defined by its methods^[3]

· fundamental principles and operational significance of economic theory^[4]

· methodological individualism versus holism in economics^[5]

· the role of simplifying assumptions such as rational choice and profit maximizing in explaining or predicting phenomena^[6]

· descriptive/positive, prescriptive/normative, and applied^[7] uses of theory^[8]

· the scientific status^[9] and expanding domain of economics^[10]

18. The economic content of the property is characterized by the following points:
a) the relationship between two paired categories: attribution - alienation;
b) the relationship of such pairs as separate categories - socialization;
c) the method of connecting the real and personal factors of production;
g) the method of distribution of income;

Date: 2016-01-03; view: 1203