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Unformatted text preview: ECON 2200-Moore Study Guide for Test 1 OPPORTUNITY COST ECONOMIES OF SCALE PRODUCTIVITY ELASTICITY 1. The study of economic history offers benefits to both historians and economists. Describe these benefits. (Remember the quote by William Parker that we discussed in class.) Without theory, history becomes undisciplined and disorganized, shaping its material by whim, or purely by rhetoric. Without history, theory loses any grounding in the actual course of human events . William Parker, 1986 Quote shows what economists and historians can learn from each other. 2. Why is the 1958 publication of a paper by Alfred Conrad and John Meyer often associated with the birth of economic history? What topic is addressed in their paper? Estimates the profitability of slavery - Used Cliometrics. Methodology: calculates rate-of-return using yield, costs, and risk. (used Asset-pricing model.) Compared ROR on slavery to ROR on other investments at the time (1840s & 1850s). Included the cost of maintaining a slave (food, shelter, clothing) and working life of 30 years. Why was their treatment of this topic controversial, and how did their results differ from previous findings, including those of Phillips (1929)? Results were that slavery was profitable, not unprofitable as Phillips (1929) found. Also proved that slave owners were rational, not unrational as Phillips thought. o Cotton farms were large and had lots of land and labor (slaves), so teams were created which were more efficient and made productivity go up. Marginal productivity was rising, therefore profitability was rising. o Phillips had good data, but missed that marginal productivity was rising. Explain the asset-pricing model and the historical data used by Conrad and Meyer to obtain their results. Asset-pricing says that what you pay for something today is roughly equal to what the stream of net benefit received over time. Formula used: Price of slave (rising)=Sum(Price of cotton (flat-lined) X (Marginal Price of Slave (rising) Maintenance Cost (flat-lined))t / (1 X t X r (discount rate))t 3. What are the primary features of cliometrics? Uses scientific method/hypothesis testing o Applies facts (data) to explicit theory (model) Uses data for not just description, but for testing theories o Continuous search for new and better data What is the focus of most cliometric research? Expanded range of topics Study and explanation of economic development. o Economic development status=refers to overall well-being of the people in a society. o Why do countries grow or not? Must measure and explain economic development. Must take into account multiple variables. Measuring tend to take a historical perspective. Considers trends and growth rates....
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