Midterm Part II

Midterm Part II - a What are four beliefs of economic...

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Midterm Dr. Happel ECN 111 Spring 2006 MW 9:15-10:30 Part II (25 points) Name ______________________ ID ______________________ 1. (4 points) a) Write out an example for the U.S. and England where the U.S. has an absolute advantage in both coal and wine and U.S. has a comparative advantage in wine. b) Why do conservative economists like free trade so much? Be precise. 2. (7 points) a) On the micro graph above, first label the axes properly (completely). b) Now draw in a typical demand curve (label it D), a typical supply curve (label it S), and then label the equilibrium price (P E ). c) Why do economists consider P E the equilibrium price? d) Finally, indicate a price support (floor) on the above graph, label it P f , and tell whether there will be a shortage or surplus. What two events will definitely occur if the government holds the price at this level? Corn
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3. (4 points)
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Unformatted text preview: a) What are four beliefs of economic conservatives that are different from the beliefs of economic liberals? b) Indicate in detail how this course has affected your attitudes about economic conservatives versus economic liberals. 4. (10 points) a) Carefully discuss Adam Smith’s notion of the invisible hand, in the process explaining what assumption Smith makes about basic human nature. b) According to Smith, what are four duties/responsibilities the government must perform? c) What did Marx say about Smith’s arguments on the beauty of laissez-faire capitalism? According to Marx, what would ultimately happen in the capitalist stage (be complete)? d) If you could talk to Marx today, what would you say to him about how his ideas have impacted the world and how you would change his thinking if you could?...
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Midterm Part II - a What are four beliefs of economic...

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