1. Who developed the theory of scale of the market?
a. Joseph Schumpeter
b. Milton Friedman
c. Adam Smith
d. John Maynard Keynes
2. Investment in human capital includes purchases of computers used by professors. ________(True/False)
3. Which of the following may influence technological progress?
a. The scale of the market
b. Monopolies
c. Research and development spending
d. All of the above
4. A policy of not enforcing patents or copyrights would________ the incentive to be innovative.
5. Cutting the Length of Patents. Suppose a group of consumer activists claims drug companies earn excessive profits because of the patents they have on drugs. The activists advocate cutting the length of time that a drug company can hold a patent to five years. They argue that this will lead to lower prices for drugs because competitors will enter the market after the five-year period. Do you see any drawbacks to this proposal?
6. Dictatorships and Economic Growth. Discuss this quote: With a strong economy, dictators could raise more money for armies and police to help keep themselves in power. Therefore, dictators should welcome rapid economic growth.
7. How Do We Measure Technological Progress? If we cannot measure every invention or new idea, how can we possibly measure the contribution to growth of technological progress?
8. Height and Weight during Rapid Industrialization. Economic historians have found that the average height of individuals in both the United States and the United Kingdom fell during the mid-nineteenth century before rising again. This was a period of rapid industrialization as well as migration into urban areas. What factors do you think might account for this fall in height and how would it affect your evaluation of economic welfare during the period?
9. Going to Medical School at the Age of 50. While we might admire someone who decides to attend medical school at the age of 50, explain using human capital theory why this is so rare.
10. Timing and Cultural Explanations of Economic Growth. Some critics of cultural theories of economic growth note that some societies can suddenly start to grow very rapidly with no obvious accompanying cultural changes. How well does Professor Gregory Clark’s theory fit the rapid growth in some East Asian economies in recent years?