Econ434MC5A - Topic 5: Capitalism and Alternatives to...

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Topic 5: Capitalism and Alternatives to Capitalism 1. Broad categories of alternative allocative mechanisms would not include: (a) markets and prices. (b) brute force. (c) random selection. (d) tradition. (e) merit. (f) government. (g) queuing. (h) classical liberalism. 2. An allocation mechanism not paired with an appropriate example would be: (a) Merit ; awarding better grades to the students who perform better on an exam. (b) Random selection ; Congress activates a draft to secure soldiers to serve in Iraq. (c) Tradition ; an oldest son inherits a family-owned auto repair shop. (d) Queuing ; offering CEO positions to unqualified candidates to compensate those who suffer most because of capitalistic exploitation. (e) Brute force ; Brutus hits Wimpy four times before Wimpy relents and gives Brutus his marbles and hamburgers. 3. Adam Smith’s “system of natural liberty” is a clear exposition of the central tenets of: (a) anarchism. (b) libertarianism. (c) democracy. (d) communism. (e) socialism. 4. The fundamental ideas of capitalism were systematically outlined in the Wealth of Nations , authored in 1776 by: (a) John Locke. (b) Adam Smith. (c) Karl Marx. (d) Georg Hegel. 5. Pure capitalism would not be characterized by: (a) private individuals owning virtually all productive resources . (b) government setting relative prices to determine the choices available. (c) the invisible hand of the marketplace coordinating most economic activity. (d) individuals deciding the best uses for the resources they own. 6. Under pure capitalism, private individuals do NOT: (a) own virtually all productive resources. (b) view relative prices as signals about the choices available. (c) rely on the market’s “invisible hand” to coordinate economic activity. (d) decide how their resources will be used. (e) adjust to prices government sets under a gold standard. 7. Critics would be least likely to identify as “market failures” specific to capitalism such problems as: (a) inadequate adjustments for negative externalities as pollution. (b) enormous disparities in the distributions of income and wealth. (c) inadequate market incentives for basic scientific research. (d) control over government policies by a small autocratic elite. (e) the promotion of destructively competitive instead of productively cooperative modes of behavior. 8. According to its advocates, the efficiency of capitalism is: (a) an inhumane way to judge alternative economic systems. (b) complemented by a lack of centralized economic power. (c) negatively related to the extent of competition among private firms. (d) recognized by even such critics of self- interested behavior as Karl Marx, Mohandas Gandhi, and Richard Cantillon. (e) undermined by the narrowly self-interested behavior of entrepreneurs. 9.
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This note was uploaded on 01/12/2010 for the course ECON 434 taught by Professor Byrns during the Spring '09 term at UNC.

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Econ434MC5A - Topic 5: Capitalism and Alternatives to...

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