04 Jun Question ECON 3520 Fall 2012
Question
ECON 3520 Fall 2012
History of Economic Thought Professor Dyer
Final Exam Review Questions
The final will consist of five questions drawn from the list of nine below. You must answer three out of the five questions. Your grade will be based on the historical accuracy, use of lecture and reading materials, and the relevance, clarity, and thoughtfulness of your answers.
1. Adam Smith built his theory of markets around the concept of natural price, where:
The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating. (Adam Smith from Heilbroner, page 89)
Explain Smith’s theory of prices. Explain why he thought it was necessary to modify his theory in order to account for the private ownership of land and capital.
2. The following passage from Smith’s Wealth of Nations describes one consequence of the division of labor that he felt called for government action.
The torpor of his[the worker’s] mind renders him, not only incapable of relishing or bearing a part in rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. (Adam Smith from Heilbroner, page 102)
Explain the role of the division of labor in Smith’s theory of economic growth. What is his recommendation for government action in order to counteract its harmful effects?
3. The following quote from Thomas Malthus’s essay on population summarizes his general conclusion:
That population does invariably increase when the means of subsistence increase. And that the superior power of the population is repressed, and the actual population kept equal to the means of subsistence, by misery and vice. (Heilbroner, page 110)
Briefly explain the reasoning behind Malthus’s conclusion about this dismal fate of society, in general, and the working class, in particular. Using specific ideas from the theories of David Ricardo and Karl Marx show how Malthus’s conclusion is reflected in their work.
4. David Ricardo is often credited (along with Malthus) with introducing the idea of diminishing marginal productivity into economic analysis through his theory of rents. For example:
It is only, then, because land is not unlimited in quantity and uniform in quality, and because in the progress of population, land of an inferior quality…is called into cultivation, that rent is ever paid for the use of it. (Heilbroner page 114)
Provide a detailed explanation of how he uses this idea to show that increasing rents, caused by renewing the Corn Laws, must come at the expense of decreasing profits.
5. What were T. Malthus’ objections to Ricardo’s attack on the Corn Laws in 1815? How did Ricardo respond to these objections in his Principles of Political Economy and Taxation and how did this response “strengthen” his conclusions about the Corn Laws in 1815?
6. John Stuart Mill argued that the nature of the laws regulating how we produce are different from the laws that regulate how we distribute the fruits of that production.
Unlike the laws of Production, those of Distribution are partly of human institution; since the manner in which wealth is distributed in any given society, depends on the statutes or usages therein obtaining. (Mill from Heilbroner page 131)
Discuss the details of specific examples (2-3) from the 19th century English labor movement of how the laws of
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