Download Sample T/F, Concepts, People to Know, Definitions

1st Mid-Term Economics 207
True/False, Multiple Choice or Fill-In the Blank, Concepts, People to Know and their contribution,
vocabulary.
1. Economic growth models of the form Q = A(K, L, HC)
Which of the following statements seem to apply the most to the Industrial Revolution in England
between 1750 and 1850?
____1. T/F. Capital formation financed by foreign investors and the state enabled England to rapidly
accumulate capital in these years.
____2. T/F. The price of wool in England and worldwide in the 1750s onward contributed indirectly to
the creation of a landless proletariat.
____3. T/F. The demand for British products was the major market force behind the growth output
during the English Industrial Revolution.
____4. T/F. The value system of the British upper class and the landed gentry contributed to the
development of technology because of their interest in science and agricultural technology.
____5. T/F. Able English entrepreneurs and inventors had little incentive to become merchants and
small industrialists because the English church disapproved of the accumulation of wealth
through economic activities.
____6. T/F. The development of technology in England turned out to be highly interrelated in the
development of many sectors of the economy and science.
____7. T/F. Most of the inventors and technologists in the 1750 – 1850 were highly trained university
graduates which enabled them to make rapid progress in the design and testing of new
technologies.
8. The following people made significant contributions to the English Industrial Revolution. (a) Please
describe what specific product or groups of products they worked on. (b) How did their products
interact or interface with other products of their time? (c) To what extent did they help finance
the Industrial Revolution?
Wilkinson
a. ______________________________________________________________________
b. ______________________________________________________________________
c.______________________________________________________________________
Watt
a. ______________________________________________________________________
b. ______________________________________________________________________
c.______________________________________________________________________
Newcomen
a. ______________________________________________________________________
b. ______________________________________________________________________
c.______________________________________________________________________
Cartwright
a. ______________________________________________________________________
b. ______________________________________________________________________
c.______________________________________________________________________
Arkwright
a.______________________________________________________________________
b. ______________________________________________________________________
c.______________________________________________________________________
Boulton
a.______________________________________________________________________
b. ______________________________________________________________________
c.______________________________________________________________________
Wedgewood
a.______________________________________________________________________
b. ______________________________________________________________________
c.______________________________________________________________________
9. Each of the new products or developments created by the men listed above created external benefits
that lead to the acceleration of the development of the users of their technologies. For example
the following inventors developed products that specifically addressed the needs of the main
industry. What were they? How?
Arkwright
Wilkinson
Watt
10. The prerequisites for the development of a market system in the 1300s to 1600s were?
a. What specific changes had to occur in the belief structure in the Catholic and other religions?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
b. What specific changes had to occur in the institutions?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
c. What specific changes had to occur in the monetization of the economy?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
d. What specific changes in market size and how did this occur?
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
11. Describe the extent to which the English Industrial Revolution relied on the growth of foreign
markets for the growth of output in the country.
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
12. What changes in the transportation system were necessary to permit the English economy to use
increasing amounts of coal?
____________________________________________________________________________________
____________________________________________________________________________________
Economies of scale
Guilds
landless proletariat
rule of law
Adam Smith
Hobbs
Marx
Mills
Terms and Definitions
Economics: the study of how economic agents (households, firms, and governments) allocate scarce
resources (land, labor, and capital) among competing ends according to the prevailing economic
system.
Political economy: applies economic analysis to the study of how we organize our political system and
how politics impacts economic behavior and outcomes.
Comparative economics: the use of international data across countries and across time to study
economic phenomena (such as the determinants of poverty, fertility, household behavior, and
other topics)
Economic system: a set of institutions for decision making and for the implementation of decisions
concerning production, income, and consumption within a given geographic area.
Organization: an administrative or functional structure formed for a particular purpose.
Hierarchy: the division of an organization into superior and subordinate levels. The person in charge of a
higher level in the organization is superior to subordinates at lower levels.
Public choice: how the political system is organized to tax citizens and to spend public resources (in fact
private consumption is determined by disposable income subtracted from taxes and also by the
desire to save. Public consumption that is to say, government spending on goods and services
should be determined by available resources not considered to be need to satisfy public
demand for goods and services and not need to satisfy the private demand for investment
goods).
The factors that make up an economic system: We study “economic systems” of countries according to
a cluster of common economic institutions.
The five types of institutions critical in differentiating economic systems
1. Property rights
2. Decision-making arrangements
3. Market Versus Plan: Institutions for the provision of information and for coordination.
4. Incentive mechanisms for setting goals and for inducing people to meet these goals.
5. Procedures for making public choices.
Ownership: an amalgam of rights that individuals may have over object or claims on objects or services
and these rights may affect an object’s disposition or its utilization.
De jure ownership:
De facto rights:
Private ownership: belongs to individuals, subject to limitations on disposition, use and earnings.
Public ownership: belongs to the state, subject to limitations on disposition, use and earnings.
Collective ownership: property rights belong to the members of the collective.
Ownership factors affecting economic outcomes:
1. Ownership rights
2. Security of Property rights
Ownership and economic systems: most economic systems are a mixture of private and public
ownership.
Definitions of organization:
1. “the complex pattern of communications and other relationships in a group of human
beings”. Herbert Simon
2. “consists of a set of participants (members) regularly interacting in the process of carrying on
one or more activities.” J.M. Montias
Important characteristics of organizations:
1. They bring various participants together to communicate among themselves.
2. They carry out a common activity
Bounded rationality: decision makers have limited information and other constraints that force them to
use rules of thumb.
Rules of thumb: guidelines for decision making with imperfect information.
Transaction costs: costs associated with searching for information, bargaining, policing, and
enforcement.
Principal-Agent problem:
Decentralized organization: decisions are made at low levels of the organization
Centralized organization: