Questions and Answers of Economics An Introduction To Traditional

Does big business have total control of elected officials and policies? Support your argument.
What is the authors’ definition of economic democracy? What does that mean?
What is a cooperative enterprise? Give examples. In what way is a cooperative enterprise democratic?
What are the arguments for and against cooperative enterprises?
What are the arguments for and against public enterprises?
What is a natural monopoly? Give examples of how policymakers deal with businesses that are natural monopolies.
List the underlying assumptions that neoclassical economist makes about people.
What do we assume about inputs, institutions, and technology in building the PPC?
Explain the foundation of neoclassical analysis. What are two key assumptions made about people and how they make decisions?
What does the PPC represent?
What creates scarcity, according to neoclassical analysis? Explain the difference between what people need and what people want and desire and how this difference creates scarcity.
What is an opportunity cost? Give an example of an opportunity cost involved in a decision you made today.
Explain what the production possibilities curve (PPC) demonstrates. What assumptions are made when creating a PPC?
What does marginal cost mean? Create an example of a marginal cost.
What does it mean if a society is producing on the frontier or directly on the PPC?
When you decide to produce more of one good on the PPC, what is the “cost”? Explain.
If a society is producing on the frontier, what happens if society decides it wants more of one of the goods being produced?
Draw a PPC diagram and illustrate the attainable region and unattainable region. Label a combination of goods representing efficient production.
Is it always impossible to produce more of one good without giving up some of the other good? Why or why not?
Why are typical textbook PPCs bowed outward?
What is the progressive criticism of the analysis of the economy, starting with isolated individuals? What is the critique of the assumptions about individuals and how individuals make decisions?
What does it mean when PPCs are illustrated with a straight line?
Why is the context in which individuals make decisions important? How do social and cultural norms play into how individuals make decisions? Give an example of how a social norm may influence an
Draw a linear PPC. Label two points on this diagram and explain how these points are consistent with the idea of constant marginal opportunity costs.
What is the progressive criticism of the neoclassical notion of scarcity? Give a specific example. What is the progressive alternative?
Draw a concave PPC. Label two points on this diagram and how these points are consistent with the law of increasing opportunity costs.
A progressive economist would claim we should not assume a market economy is always producing on the PPC. Explain. What does this mean about the decision to produce additional amounts of one good?
Draw a linear PPC like that illustrating the work of Student Painters. On the vertical axis, label large houses, and on the horizontal axis, put small houses. Assume that the company begins using a
Progressive economists claim the types of choices different people make are very different from the simple choices presented in the overview of neoclassical choice. Explain.
In the 1980s, rates of growth in Japan were higher than in the United States. One argument given for the stronger growth in Japan was higher levels of investment. Draw a PPC for both the United
What would cause a parallel shift in a PPC? What would cause a change in its slope?
Give an example of how a change in technology might have an effect on the production of one good and not the other, and illustrate this situation with a PPC. What changed in the graph?
What kind of institutional changes could cause an increase in production even though no other inputs increased, and no technology changed?
Assume a hurricane devastated an island economy that produced only coconuts and bamboo. Demonstrate this event on the island’s PPC.
Compare and contrast laissez-faire to social Darwinism. Specifically, how did these two views support the existence of income inequality? Why were some people poor while others were rich?
What do the authors mean by class? What is the largest class?
What factors would give employers power as they bargain with employee's overcompensation, hours, and effort? Explain.
How does the use of term “surplus” in this chapter differ from its use in Chapter 2?
List different types of pollution and their impact on the environment.
Do the different types of pollution affect only the area immediately surrounding the source of the pollution? Explain using examples.
Are the effects of some types of pollution always immediately apparent? Why or why not? Give an example.
Explain how firms can pass on the costs of pollution to the public.
What are some ways the public “pays” for the costs associated with pollution from nearby plants or factories?
If firms are not paying all costs associated with the production of a product, how do you think that will affect the price of that product in the market and the consumption of that product?
Describe the market solutions to pollution. What are some possible problems with the solutions?
What is the implied assumption about how people behave in the “tragedy of the commons”? Do you think this is always the way people behave? How might different institutions and incentives work
According to liberals, why does the Environmental Protection Agency exist? How does it fit into their policy suggestions about pollution?
What are problems that might be associated with regulation of polluting firms?
How do conflicts of interest of profit-maximizing business and governmental regulators affect pollution laws and their enforcement? Give an example.
Climate change provides an engaging example of an issue where neoclassical conservatives, neoclassical liberals, and progressives have far different perceptions of the problem and proposed solutions.
What do progressives suggest is the solution to pollution?
Why is a no-growth policy to pollution not feasible? Give some specific examples to support your argument.
What do you think would be an effective policy to control pollution? How would you support your argument?
Explain the advantages and disadvantages of a carbon tax and an emissions cap-and trading system. Which do you think is better? Why?
What is formal democracy, and what is effective democracy?
Give some examples of why people may not participate in democratic processes such as elections or running for office in the United States.
What is the feedback mechanism discussed in the section “Economic Power and the President”? Explain how it furthers the interests of the group in power.
Give examples of how race and gender affect election participation and outcomes. What are the links to levels of income? How do those links affect the examples you chose?
What are the most important interest groups that influence the American government?
What are the mechanisms through which wealthy individuals and large corporations influence the political system?
Distinguish between progressive, regressive, and proportional or flat taxes. Explain how regressive taxes impact low-income taxpayers more heavily than do progressive taxes.
Discuss an example of Congress’s disregard for the wishes of the majority of the population.
How does lobbying work? How can economic power impact lobbying?
What are the incentives for high-income taxpayers to retain the current federal income tax structure? Explain how high-income taxpayers (individuals and businesses) work to retain the current
Explain the difference between relative poverty and absolute poverty. Why is relative poverty so important?
What are the arguments for policies that support the income of low-wage workers in addition to policies that support people who cannot work?
Why do some school districts struggle to get supplies and retain teachers while other school districts have the latest technology, the newest books, and the best teachers?
How do economic differences lead to treating students differently in different school districts? What does this inequity mean for breaking (or perpetuating) the cycle of poverty? What does it mean
One of the roles of the government is as a referee or arbiter between businesses and between businesses and labor. How can economic power influence the decisions of the referee? Give examples.
Why must government enforce private property rights? In certain circumstances, how can enforcing private property rights lead to ethical and moral concerns? Give examples.
According to Owen, if individualism seemed to imply equality why did it not lead to equality in practice, in other words, why does a hierarchical society persist?
Goodwin introduced two key ideas that were often repeated and used in the nineteenth century. Explain why a government in a capitalist society would never address the problems of capitalism.
List and explain the two main methods for achieving socialism.
How did the ideals of socialism conflict with the major tenets of classical liberalism?
Compare and contrast the major tenets of capitalism and classical liberalism with the fundamental ideas present in socialism. Which side do you find most appealing?
Explain how capitalists exploited the working class.
Does socialism mark the re-emergence of Christian Paternalism? Why or why not?
Pick three people mentioned in this chapter whose ideas are most appealing to you and provide a brief summary of their thoughts. In addition, explain why you picked these particular people/ideas.
What is “historical materialism”? How did Marx used this method to analyze society?
Explain the concept of a mode of production. What are the four modes of production Europe experienced?
What did all four modes of production have in common? How was socialism different in Marx’s mind?
Name the four classes present in any capitalist system and explain their respective roles in society.
What four classes of people existed in a capitalist society? What characteristics does each class possess?
List and describe the two important functions served by the unemployed and explain why they are important to capitalism.
What is surplus? How does the owner of the means of production calculate his profit?
Describe the source of income for each of the four main classes under capitalism as described by Marx. From what are interest, rents, profits, and taxes derived?
Explain the labor theory of value and labor as the source of surplus.
Explain how Marx sees workers being exploited.
How does capitalism alienate the worker in society? How does it affect the worker?
What is the present justification for allowing the existence of profits for the owners of capital? Why does Marx refute this argument?
Why is Marx concerned about labor being treated just like any other commodity? What impact does it have on the social nature of work?
What role do economic crises play in the business cycle? What prerequisites are necessary for the modern business cycle and why are they only possible under a capitalist system?
What will eventually happen to the capitalist mode of production if class conflict continues?
Why would profits ever decline and cause the downturn in a business cycle? How do workers get shorted no matter what stage of the business cycle the economy is in?
Which factors about the economy inevitably lead to economic concentration?
According to Marx, could the “state” be a catalyst for the transition from capitalism to socialism? Explain how the transition will occur if not by the state.
List and explain three to four reasons for the shift from an agricultural based state to a capitalist one. How did the use of railroads affect national economic growth?
How did the larger size of firms help to increase productivity?
What factors in the economic, social, and political atmosphere were conducive to the formation of monopolies? Give at least three examples from the reading.
Name a few methods used by the robber barons to create monopolies (industrial warfare). How did railroads have an effect on the growth of cities? How did they abuse this power?

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