ECON 355 – History of Economic Analysis Final Exam

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ECON 355 – History of Economic Analysis Final Exam 

 

Directions: 

 

You are only allowed to use your textbook.  Your answers should be approximately one-half to one page in length, typed, and double-spaced.

 

Citation of sources is required, though the citation could be as simple as (Brue and Grant, Chapter 1, p. 4).

 

Date and Time Due:  Monday, December 11, 12:15 p.m. Turn in your exam via the Moodle link.

ECON 355 – History of Economic Analysis Final Exam 

Late policy:  you will lose one letter grade for each day that the exam is late.  The exam will not be accepted after 12:00 p.m. on Friday, December 15.

 

Short Answer (20 points each, 100 points total)

 

  1. Why, according to Sismondi, are economic crises and imperialism inherent to capitalism? What role do bankers play in this?

According to Sismondi, economic crisis and imperialism are inherent to capitalism because he argued that there is a time when the wages earned by individuals are at a subsistence level. During this period, there is an increase in capital funds that are utilized for machine investments. Bankers play a crucial role in this through the provision of credit which results in an investment boom. This leads to a rise in the quantity of manufactured goods. The result of the rise in the production of the manufactured commodities is that they result in overproduction or periodic crisis. This situation may also lead to high rates of unemployment and also affects the home market which may trigger various industries to consider coming up with foreign markets which may lead to nationalistic wars (Chapter 9, pg 173).

ECON 355 – History of Economic Analysis-econ 355 – History of Economic Analysis Final Exam 

Final Exam (100 points)

  1. What are the major tenets of marginalist thought and determine which of them apply to the writings of Cournot.

The major tenets of the marginalist theory are as follows;

  • The marginalists focused on the margin which implies that they were more concerned with the point of change in the points of decision making.
  • They also subscribed to the thought that individuals were rational consumers. To that end, they were of the opinion that the consumers established a balance between pleasures and pains, balancing the present and the future needs as well as in the measurements of the marginal utilities of various goods.
  •  They also put more emphasis on the microeconomics
  • There was the application of the abstract, deductive approach.
  • There was also an emphasis on pure competition.
  • The price of the goods or services was determined by the demand
  • There was an emphasis on subjective utility
  • The equilibrium approach was also applied
  • They also thought about the merger of the land and the capital goods
  • Minimum government intervention.

The major tenets of marginalist thought that apply to the writings of Cournot are as follows;ECON 355 – History of Economic Analysis Final Exam 

  • The marginalists focused on the margin which implies that they were more concerned with the point of change in the points of decision making.
  • There was also an emphasis on pure competition
  • They also subscribed to the thought that individuals were rational consumers
  • The equilibrium approach (Chapter 12, pg 224).

 

ECON 355 – History of Economic Analysis Final Exam 

 

  1. Contrast Marshall’s distinctions between: (a) supplementary and prime costs; (b) immediate present, short run, and long run; (c) increasing and decreasing cost industries, and (d) internal and external economies.
  2. According to Alfred Marshall, the distinction between supplementary and prime costs is that supplementary costs are the fixed costs which do not vary in the short run, for example, plant depreciation, on the other hand, prime costs are the variable costs that do not remain constant (Chapter 8, pg 303).
  3. He defines the immediate present as the time during which the quantity of the goods or services in the market cannot be altered to meet the changes in the demand for the commodities. Normally, this time is very short and may be equivalent to a day. Besides, he also defines the short run as the period in which the variable costs can be altered, but the fixed costs remain constant. Finally, he defines, the long run as the time in which all the costs are variable (Chapter 15, pg 303).
  4. He defines the increasing cost industries as the representatives of a firm whose increase in the internal efficiency results in a rise in the costs of production while the decreasing cost industries are the representatives of a firm whose increase in the internal efficiency results in falling costs of production (Chapter 15, pg 312).
  5. the internal economies refers to the benefits enjoyed by a representative firm as a result of being more efficient in its internal operations while the external economies refer to the benefits enjoyed by a representative firm as a result of the changes that take place externally (Chapter 15, pg 312).

ECON 355 – History of Economic Analysis Final Exam 

  1. Proponents of limited government often look to the classical school for intellectual support. What is one way the classical school supports their view? What is one way it perhaps calls for more government than the proponents of limited government would like?

One way that the classical school supports the proponents of the limited government is the application of the utilitarianism principle which states that the greatest happiness for the greatest number of people should be a guiding principle for the government when it is making its decisions. For instance, if one causes injury to other people in the pursuit of pleasure, the individual is taken to court. One way the utilitarianism call s for more government than the proponents of the limited government is the increase in the need for security as a result of a rise in crime rate and robbery (Chapter 8, pg 132).

 

  1. Name two economists researched by your fellow classmates and list one thing about each economist that you found particularly interesting and explain why.

The two economists researched by classmates are;

Jeremy Bentham- he is one of the classical economists. I found it interesting that he chose money as his unit of cardinal measurement when he had argued a case for the utilitarianism principle. It is because no one can attach the monetary value to happiness (Chapter 8, pg 132).

 

John Stuart Mill- he is one of the greatest classical economists of his time. I find the works of John Stuart Mill interesting. It is because he looks all rounded in a democratic society because he did advocate for the rights of the women and championed for a democratic society through his book, “Considerations on Representative Government” (Chapter 8, pg 157).ECON 355 – History of Economic Analysis Final Exam