midterm exam - 1. Utility maximization is important because...

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1. Utility maximization is important because society should aim to maximize the total utility of individuals, aiming for "the greatest happiness for the greatest number of people" One variable is religion. People in the pre mediaeval were sensible of the content from the religious elite. There were differences on the European and Middle Eastern. The Islam from the Middle Eastern approach has intended to focus attention on origins such as: ideas, groups, religious practices, etc. to explain its history. While Europeans focus on institution. Another variable is the diffusion of power and revenue sources among elite households on the one hand; and the physical propinquity of rulers, their ability to reassign revenue resources, and the relative absence of restraints on their seizure of property on the other. 2. Under North’s conceptual, present and future are related by continuity of institution. He integrates historic through his adoption of concept of path dependence. North defines property rights, law, customs, codes of conduct, taboos and traditions, from organizations- political parties, firms, farms, and other groups. Plus, organizations frequently must act on incomplete information and process. 3a. Holland Opportunity cost of 1 pound of cheese= 2 gallons of wine Opportunity cost 1 gallons of wine = 1/2 pound of cheese In Italy Opportunity cost of 1 pound of cheese=1/ 2 gallons of wine Opportunity cost 1 gallons of wine =2 pound of cheese Italy has the absolute advantage in the production of wine. Holland has the absolute advantage in the production of cheese. It means both countries use fewer resources to produce their goods. Holland has a comparative advantage in wine and should export cheese to Italy. Italy has a comparative advantage in cheese and should export wine to Holland. 3b. 4. The overall benefit a society composed of consumers and producers receives when a good or service is bought or sold given a quantity provided and a price attached. It is important because when the supply of good expands or increase the price falls and the consumer surplus will increase and this benefits two group of people. 5. People in society do not grow because they view innovation as deviant behavior and punishable. This effect causes that central problem for north, which is the game theory. So they didn’t have institution or a government that enforce the laws. 6. Financial intermediaries a process that occurs when a financial source borrows money from one source to loan to another source for investment, funding or resources. This type of assistance is crucial to economic development and growth. The availability of these profitable savings and earnings channels has a direct effect on the economic well being of the community. The competition that occurs amongst these channels pushes
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down the cost of these funds and enables for fund availability 7. The Neolithic Revolution is the transition from hunter gatherer cultures to agriculture, which started about twelve thousand years ago, introduced a growing element
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This note was uploaded on 09/22/2011 for the course ECONOMICS 6311 taught by Professor Segerson during the Spring '10 term at UConn.

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midterm exam - 1. Utility maximization is important because...

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