Answer all ten questions below:
1. Using a concept of system that is analogous to that used in the physical sciences, an economic system consists on the one hand of 'objects' and on the other hand of 'laws' that govern the interaction of the objects. According to your author, what are some of the so-called 'objects' of an economic system? What are some of the 'laws' of an economic system as described by your author?
2. Economic systems differ from each other along three important dimensions: the extent of individual rights, the means of coordinating economic activity, and the incentive systems that influence an individual's response. Discuss.
3. How does free market capitalism solve the problem of what to produce? Explain.
4. How does free market capitalism solve the problem of how to produce? Explain.
5. According to Adam Smith's perspective, how does free market capitalism foster economic growth? Explain. How is Smith's vision different from that of Schumpeter?
6. In tenns of their affect on the operation of a free market, what are the consequences of externalities? Are there any free market solutions to the problem of externalities?
7. According to your author, a competitive market system is characterized by a number of advantageous features. Discuss.
8. Why is the government not a "benevolent, costless social guardian?"
9. Examine the rationale for government intervention to amend or correct the income distribution resulting from market forces.
10. What are the basic tenets, or institutions of capitalism? How does the U.S. economy depart from an ideal free market capitalist economy? [Use three four examples of specitic policies that are currently in effect which are not consistent with an ideal free market capitalist economy]