Deck 17: Robinson Crusoe Two Perspectives on Microeconomics

Question 1

Whats defention of terms:
-neoclassical economics

Answer 1

asserts a basic policy conclusion that free-market capitalism works well as long as government does not intervene in the economy

Question 2

Whats defention of terms:
-progressive political economists

Answer 2

a scholar who does not believe that the existing market system is perfect; one who analyzes the economic system in order to see how to change it so as to improve it in the interest of better social outcomes

Question 3

Explain the key differences between neoclassical economics and progressive political economy.
-What are the two key assumptions that neoclassical economists make about individuals? What are those assumptions used for?

Answer 3

Neoclassical economics assumes that individuals make rational decisions or choices and that these choices are made in the individual's own best self-interest These two assumptions are used to deduce how individuals as members of households or owners of businesses made decisions about consumption and production

Question 4

Explain the key differences between neoclassical economics and progressive political economy.
-What do progressive political economists claim is a key factor for individuals making decisions? Give an example.

Question 5

Explain the key differences between neoclassical economics and progressive political economy.
-Neoclassical economists talk about how individuals are free to spend their dollars in the market. What does this mean? What problems do progressive political economists see with this "freedom"?

Question 6

Explain the key differences between neoclassical economics and progressive political economy.
-What role should the government play according to neoclassical economists? According to progressive political economists?

Question 7

Describe how the different models or views of neoclassical economists and progressive political economy lead to different policies in dealing with social issues.
-Should the government do much spending in the economy according to neoclassical economists? Why or why not?

Question 8

Describe how the different models or views of neoclassical economists and progressive political economy lead to different policies in dealing with social issues.
-What types of spending does each group think the government should do in the economy?

Question 9

Describe how the different models or views of neoclassical economists and progressive political economy lead to different policies in dealing with social issues.
-What do the neoclassical economists have to say about taxes? How do taxes interfere with the individual?

Question 10

Compare and contrast the two views in the case of a hypothetical "Robinson Crusoe" economy.
-Briefly describe the Robinson Crusoe metaphor underpinning the traditional economics perspective.

Question 11

Compare and contrast the two views in the case of a hypothetical "Robinson Crusoe" economy.
-What happens if transactions are not voluntary? Can you give an example of a transaction that might not be voluntary?

Question 12

Compare and contrast the two views in the case of a hypothetical "Robinson Crusoe" economy.
-What shortcomings do critical economists see in the neoclassical use of the Robinson Crusoe metaphor?

Question 13

Compare and contrast the two views in the case of a hypothetical "Robinson Crusoe" economy.
-How does relative power enter into transactions between employers and employees?

Question 14

Compare and contrast the two views in the case of a hypothetical "Robinson Crusoe" economy.
-What is meant by consumers "voting with their dollars"? Does everyone have an equal vote? Why or why not?

Question 15

The text distinguishes between two perspectives in microeconomics. These two perspectives are

A) Republican and Democrat
B) Libertarian and Mercantilist
C) Progressive and Neoclassical
D) Mercantilist and Capitalist

Question 16

What is microeconomics?

A) microeconomics is the study of how individual consumers, firms, and workers make decisions about production and consumption.
B) microeconomics is the study of how individual consumers, firms, and workers make decisions about the aggregate economy.
C) microeconomics is the study of how the economy as a whole behaves.
D) microeconomics is the study of business cycles, inflation and economic growth.

Question 17

What role should the government play in the economy according to neoclassical economists?

A) neoclassical economists believe the government should intervene to stabilize business cycles.
B) neoclassical economists believe the government should not intervene to stabilize business cycles.
C) neoclassical economists believe the government should intervene in order to increase social equality.
D) neoclassical economists believe the government should not intervene in the economy except in the area of health care.

Question 18

Which of the following is NOT an assumption of the Robinson Crusoe economy presented by Milton Friedman?

A) each household in the economy is an independent producer.
B) each household exchanges its goods and services for other goods and services produced by other households.
C) each household exchanges goods and services freely and voluntarily.
D) each household pays a fixed percentage of income to the government.

Question 19

What is meant by the phrase, "voting with their dollars?"

A) "Voting with their dollars" implies that consumers choose the available products on the market by means of their consumer purchases.
B) "Voting with their dollars" implies that voters influence government by means of campaign contributions.
C) "Voting with their dollars" implies that consumers influence business activities through bribes and payoffs.
D) "Voting with their dollars" implies that voters must pay one dollar each time they vote.

Question 20

The text mentions several well-known neoclassical and progressive economists. Which of the following is a true statement?

A) Milton Friedman is a well-known progressive economist.
B) Robinson Crusoe is a well-known neoclassical economist.
C) John Maynard Keynes is a well-known progressive economist.
D) Karl Marx is a well-known neoclassical economist

Question 21

What is the basic policy conclusion of neoclassical economics

A) free-market capitalism in inherently unstable and occasionally requires government intervention.
B) free-market capitalism works well as long as government does not intervene in the economy.
C) free-market capitalism is exploitative and oppressive and should be replaced by a more equitable system.
D) free-market capitalism is imperfect but can be reformed to improve social outcomes.

Question 22

The basic unit of analysis in neoclassical economics is

A) the util
B) the economy
C) the individual
D) relationships between groups in the economy.

Question 23

The basic unit of analysis in progressive economics is

A) the util
B) the economy
C) the individual
D) relationships between groups in the economy.

Question 24

Progressive economists identify the relationships between groups in a economy as

A) fundamentally in harmony.
B) often in conflict.
C) less important than relationships between individuals.
D) united in their opposition to government.