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Replies to This Discussion

Presently, countries are classified as free, mostly free, mostly un-free, and repressed. List the determining factors of this classification?

 

Perfectly competitive market is characterized by seven conditions. In a monopoly, two of these conditions are not present. Briefly describe those conditions?

 

“Socialists address this concern by stating that the benefits of a society should be distributed according to need, and that people should contribute according to their abilities.” Criticize.

 

Enumerate the difference between free market economy and planned economy.  Identify one country for each where these approaches have been used?

 

The principle of increasing marginal utility costs states that after a certain point, each additional item the seller produces costs him more to produce than earlier items.  Why? Explain with an example.

MGT610

Midterms

Q1- Difference Ethic of care and ethic of communitarian?

 

Answer:

The ethics of care (alternatively care ethics or EoC) is a normative ethical theory: a theory about what makes actions morally right or wrong. It is one of a cluster of normative ethical theories that were developed by feminists in the second half of the twentieth century.

Ethics of Communitarian: A communitarian ethic is an ethic that sees concrete communities and communal relationships as having a fundamental value that should be preserved and maintained.

 

Q2- In monopoly two of seven condition are absent discus them briefly ? 3marks

 

Answer:

The three values of capitalist justice are only produced if the market embodies the seven conditions that define perfect competition. If even one of the conditions is not present, then the market cannot claim to promote those values. In a monopoly, two of the seven conditions are absent: there is only one seller, and other sellers cannot enter the market. Monopolistic markets and their high prices and profits violate capitalist justice because the seller charges more than the goods are worth. Thus, the prices the buyer must pay are unjust. In addition, the monopoly market results in a decline in the efficiency of the system.

 

Q3-The principle of increasing marginal utility costs states that after a certain point, each additional item the seller produces costs him more to produce than earlier items ,Discuss Briefly

 

Answer:

The movement towards the equilibrium point can be explained in terms of two principles: the principle of diminishing marginal utility and the principle of increasing marginal costs.

On the supply side, the more units of a good, a producer makes, the higher the average costs of making each unit. This is because a producer will use the most productive resources to make his or her first few goods. After this point, the producer must turn to less productive resources, which means that his costs will rise.

 

Q4- Discuss Versions of Kant’s categorical imperative?

 

Answer:

First Version

“An action is morally right for a person in a certain situation if, and only if, the person's reason for carrying out the action is a reason that he or she would be willing to have every person act on, in any similar situation.”

Second Version

“An action is morally right for a person if, and only if, in performing the action, the person does not use others merely as a means for advancing his or her own interests, but also both respects and develops their capacity to choose freely for themselves.”

This version of the categorical imperative implies that human beings have an equal dignity that sets them apart from things such as tools or machines and that is incompatible with their being manipulated, deceived, or otherwise unwillingly exploited to satisfy the self-interests of another.

 

Q5-Discuss First Principle of Rawls theory of Justice

 

Answer:

Each person has an equal right to the most extensive basic liberties compatible with equal liberties for all (the principle of equal liberty)

Principle 1 is called the principle of equal liberty. Essentially, it says that each citizen's liberties must be protected from invasion by others and must be equal to those of others. These basic liberties include the right to vote, freedom of speech and conscience and the other civil liberties, freedom to hold personal property, and freedom from arbitrary arrest.

 

Q6- Something about cost-benefits analysis? 3 marks

 

Answer:

Economic cost–benefit analysis

This type of analysis is used to determine the desirability of investing in a project (such as a dam, factory, or public park) by figuring whether its present and future economic benefits outweigh its present and future economic costs. To calculate these costs and benefits, discounted monetary prices are estimated for all the effects the project will have on the present and future environment and on present and future populations.

 

 

Q7- Do you agree that in a free competitive market, organizations ignored the care ethics? if yes then why?  5 marks

 

Answer:

Free competitive markets ignore and even conflict with the demands of caring. As we have seen, an ethic of care implies that people exist in a web of interdependent relationships and should care for those who are closely related to them. A free market system, however, operates as if individuals are completely independent of each other and takes no account of the human relationships that may exist among them.

 

Q8- John locks argues that if the earth was given by God to all human beings in common even that private property can be justified. What is the argument that john locks offers to support this claim? 5 marks

 

Answer:

John Locke (1632-1704), an English political philosopher, is generally credited with developing the idea that human beings have a "natural right" to liberty and a "natural right" to private property. As he puts it, in a state of nature, all men would be in:  

“A state of perfect freedom to order their actions and dispose of their possessions and persons as they think fit, within the bounds of the law of nature, without asking leave, or depending upon the will of any other man. A state also of equality, wherein all the power and jurisdiction is reciprocal, no one having more than another... without subordination or subjection [to another].... But... the state of nature has a law of nature to govern it, which obliges everyone: and reason, which is that law, teaches all mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions.”

 

Q9- LAW OF NATURE (Locke's views) 5 marks

 

Answer:

John Locke (1632-1704), an English political philosopher, is generally credited with developing the idea that human beings have a "natural right" to liberty and a "natural right" to private property. Locke argued that if there were no governments, human beings would find themselves in a state of nature. In this state of nature, each man would be the political equal of all others and would be perfectly free of any constraints other than the law of nature—that is, the moral principles that God gave to humanity and that each man can discover by the use of his own God-given reason. Thus, according to Locke, the law of nature teaches us that we have a natural right to liberty. But because the state of nature is so dangerous, says Locke, individuals organize themselves into a political body to protect their lives and property. The power of government is limited, however, extending only far enough to protect these very basic rights.

 

Q10- Write list the features of market economy 5

 

Answer:

Majority of a nation’s land, factories, and other economic resources are privately owned, either by individuals or businesses.

  • Features of a Market Economy
  • Free choice: individuals have purchase options.
  • Free enterprise: companies can decide what to produce and which markets to compete in.
  • Price flexibility: prices rise/fall reflecting supply and demand.
  • Focus on China

 


Q11- Define mixed economy and its elements 5

 

Answer:

Economic system in which land, factories, and other economic resources are more equally split between private and government ownership. Government controls economic sectors important to national security and long-term stability. Generous welfare system supports unemployed and provides health care.

1. Origins of the Mixed Economy 

a. Successful economy must be efficient and innovative, but also protect society. Goals are low unemployment, low poverty, steady economic growth, and an equitable distribution of wealth.

b. Many mixed economies today are modernizing to become more competitive. 

2. Decline of Mixed Economies 

Mixed economies are converting to market-based systems. Government ownership means less efficiency, innovation, responsibility and accountability; higher costs; slower growth; and higher taxes and prices.

a. Move Toward Privatization

 i. Selling government-owned economic resources to private companies and individuals. ii. Increases efficiency, cuts subsidies to state-owned firms, curtails appointment of managers for political reasons. 

3. Market Economy

 Majority of a nation’s land, factories, and other economic resources are privately owned, either by individuals or businesses. Price mechanism determines:

  • Supply: The quantity of a good or service that producers are willing to provide at a specific selling price.
    • Demand: The quantity of a good or service that buyers are willing to purchase at a specific selling price.


Q12- Define ideology? Individualistic ideology and communistic ideology 3

 

Answer:

Ideology refers the system of ideas that explains and lends legitimacy to actions and beliefs of a social, religious, political, or corporate entity. Individualistic societies promote a limited government whose primary purpose is to protect property, contract rights, and open markets. Communitarian societies, in contrast, define the needs of the community first and then define the rights and duties of community membership to ensure that those needs are met. These two camps face the problem of coordinating the economic activities of their members in two distinct ways. Communitarian systems use a command system, in which a single authority decides what to produce, who will produce it, and who will get it. Free market systems are characteristic of individualistic societies.


Q13- Define Rawl's theory of justice ideas 3

 

Answer:

John Rawls' theory of justice as fairness is an attempt to bring many of these disparate ideas

together in a comprehensive way. According to his theory, the distribution of benefits and

burdens in a society is just if:

1. Each person has an equal right to the most extensive basic liberties compatible with

equal liberties for all (the principle of equal liberty); and

2. Social and economic inequalities are arranged so that they are both:

a) To the greatest benefit of the least advantaged (the difference principle), and

b) Attached to offices and positions open fairly and equally to all (the principle of

equal opportunity).


Q14- What consideration you will need about goods and its benefits, which
are presented in tradition occasion 3 

Answer:

 

Q15- Social Darwinist? 3-marks

Answer:

Social Darwinists had a different take on the utilitarian justification for free markets. They argued that economic competition produced human progress. If governments were to interfere in this process, they would also unintentionally be impeding human progress. Weak firms must be weeded out by competition, they claim. The basic problem underlying the views of the social Darwinist, however, is the fundamental normative assumption that survival of the fittest means survival of the best. That is, whatever results from the workings of nature is necessarily good. The fallacy, which modern authors call the naturalistic fallacy, implies, of course, that whatever happens naturally is always for the best.

 

Q16- Describe main difference between Monopoly, and oligopoly?(5)

 

Answer:

Monopoly is an economic market condition where one seller dominates the entire market. Oligopoly is an economic market condition where numerous sellers have their presence in one single market a small number of large firms that dominate the industry.

In monopoly a single firm controls a large market share in the industry, thereby gaining the ability to set price. In oligopoly a small number of firms dominate the industry. These firms compete with each other based on product differentiation, price, customer service etc.

A monopoly usually exists when barriers to entry are very high - either due to technology, patents, distribution overheads, government regulation or capital-intensive nature of the industry. In oligopoly barriers to entry are very high as it is difficult to enter the industry because of economies of scale.

Monopoly Examples :

Microsoft (Operating systems, productivity suites), Google (web search, search advertising), DeBeers (diamonds), Monsanto (seeds), Long Island Rail Road etc.

Oligopoly Examples:

Health insurers, wireless carriers, beer (Anheuser-Busch and MillerCoors), media (TV broadcasting, book publishing, movies), etc.

 
Q17- What is monopolistic and monopolistic competition? Explain the main points of difference

Answer:

 

A type of competition within an industry where:

1. All firms produce similar yet not perfectly substitutable products.

2. All firms are able to enter the industry if the profits are attractive.

3. All firms are profit maximizers.

4. All firms have some market power, which means none are price takers. 

A situation in which a particular market is controlled by a small group of firms.  An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market.


Q18- Locke's critics focus on four weaknesses in his argument

 

Answer:

The assumption that individuals have natural rights: This assumption is unproven and assumes that the rights to liberty and property should take precedence over all other rights. If humans do not have the overriding rights to liberty and property, then the fact that free markets would preserve the rights does not mean a great deal. 

The conflict between natural (negative) rights and positive rights: Why should negative rights such as liberty take precedence over positive rights? Critics argue, in fact, that we have no reason to believe that the rights to liberty and property are overriding. 

The conflict between natural rights and justice: Free markets create unjust inequalities, and people who have no property or who are unable to work will not be able to live. As a result, without government intervention, the gap between the richest and poorest will widen until large disparities of wealth emerge. Unless government intervenes to adjust the distribution of property that results from free markets, large groups of citizens will remain at a subsistence level while others grow ever wealthier. 

Individualistic assumptions and their conflicts with the ethics of caring: Locke assumes that people are individuals first, independent of their communities. But humans are born dependent on others, and without caring relationships, no human could survive. The degree of liberty a person has depends on what the person can do. The less a person can do, the less he is free to do. But a person's abilities depend on what he learns from those who care for him as well as on what others care to help him to do or allow him to do.

Q19- What are the two ideological camps in free trade theories? Explain in detail

Answer:

Two important ideological camps, the individualistic and communitarian viewpoints, characterize modern societies. Individualistic societies promote a limited government whose primary purpose is to protect property, contract rights, and open markets. Communitarian societies, in contrast, define the needs of the community first and then define the rights and duties of community membership to ensure that those needs are met. 

These two camps face the problem of coordinating the economic activities of their members in two distinct ways. Communitarian systems use a command system, in which a single authority decides what to produce, who will produce it, and who will get it. Free market systems are characteristic of individualistic societies. Incorporating ideas from thinkers like John Locke and Adam Smith, they allow individual firms to make their own decisions about what to produce and how to do so.


Q20- What is the concept of Laissez - Fair in free market? 3 marks.

Answer:


An economic theory from the 18th century that is strongly opposed to any government intervention in business affairs. 

Sometimes referred to as "let it be economics." 


Q21- How Adam Smith utilitarian arguments been criticized

Answer:

Smith's utilitarian argument is most commonly criticized for making what some call unrealistic arguments. First, Smith assumes that no one seller can control the price of a good. Though this may have been true at one time, today many industries are monopolized to some extent. Second, Smith assumes that the manufacturer will pay for all the resources used to produce a product, but when a manufacturer uses water and pollutes it without cleaning it, for example, someone else must pay to do so. Third, Smith assumes that humans are motivated only by a natural, self-interested desire for profit. This, say his critics, is clearly false. Many humans are concerned for others and act to help others, constraining their own self-interest. Critics make humans selfish and make us think that the profit motive is natural market systems, say Smith’s critics, make humans selfish and make us think that the profit motive is natural.

Major problems with utilitarian

The major difficulty with utilitarianism, according to some critics, is that it is unable to deal with two kinds of moral issues: those relating to rights and those relating to justice. If people have rights to life, health, and other basic needs, and if there is such a thing as justice that does not depend on mere utility, then utilitarianism does not provide a complete picture of morality. Utilitarianism can also go wrong, according to the critics, when it is applied to situations that involve social justice. Utilitarianism looks only at how much utility is produced in a society and fails to take into account how that utility is distributed among the members of society.


Q22- Presently Countries are classified as Free, Mostly Free, unfree and repressed. Which are the determining factors of this classification. (marks 3)

 

Answer:

Determining factors include: trade policy, the fiscal burden of the government, the extent and nature of government intervention in the economy, monetary policy, capital flows and investment, banking and financial activities, wage and price levels, property rights, other government regulation, and informal market activities. Over time, more and more countries have moved toward greater economic freedom. Countries ranking highest on this index tend to enjoy both the highest standards of living as well as the greatest degree of political freedom.


Q23- Explain Principle of Diminishing Marginal Utility with the help of an example. 5 marks

Answer:

The law of diminishing marginal utility means that the value of a good, the extra utility derived from good, declines as more of the good is consumed. This has a direct bearing on the market demand, the demand price, and the law of demand. If the satisfaction obtained from a good declines, then buyers are willing to pay a lower price, hence demand price is inversely related to quantity demanded, which is the law of demand.


Q24- Economic free index3

 

Answer:

The Economic Freedom Index approximates the extent to which a government intervenes in the areas of free choice, free enterprise, and market-driven prices for reasons that go beyond basic national needs.  Presently, countries are classified as free, mostly free, mostly unfree, and repressed.  Determining factors include:  trade policy, the fiscal burden of the government, the extent and nature of government intervention in the economy, monetary policy, capital flows and investment, banking and financial activities, wage and price levels, property rights, other government regulation, and informal market activities.  Over time, more and more countries have moved toward greater economic freedom.  Countries ranking highest on this index tend to enjoy both the highest standards of living as well as the greatest degree of political freedom.


Q25- In perfect compaction the demand curve is always downward slopping. Why?
5 marks

Answer:

Because in order to induce consumers to buy more in a market, price must be reduced. With a lower price, more consumers will be willing and able to purchase the good.

Demand curve is slope downward because of inverse relationship between price and quantity.

The demand curve slopes downwards due to the following reasons

(1)   Substitution effect: When the price of a commodity falls, it becomes relatively cheaper than other substitute commodities.

(2)   Income effect: When the price of a commodity falls, the consumer can buy more quantity of the commodity with his given income, as a result of a fall in the price of the commodity, consumer's real income or purchasing power increases

(3) Number of consumers: When price of a commodity is relatively high consumers can afford to buy it.


Q26- Define theory of Absolute Advantage. Compare it with Comparative advantage? (5)

Answer:

In 1776 Adam Smith asserted that the wealth of a nation consisted of the goods and services available to its citizens.  His theory of absolute advantage holds that a country can maximize its own economic wellbeing by specializing in the production of those goods and services that it can produce more efficiently than any other nation and enhance global efficiency through its participation in (unrestricted) free trade.  Smith reasoned that: 

(i)      workers become more skilled by repeating the same tasks;

(ii)    workers do  not lose time in switching from the production of one kind of product to  another; and

(iii)    Long production runs provide greater incentives for the development of more effective working methods. 

 

Smith also asserted that country-specific advantages can either be natural or acquired. 

In 1817 David Ricardo reasoned that there would still be gains from trade if a country specialized in the production of those things it can produce most efficiently, even if other countries can produce those same things even more efficiently.  Put another way, Ricardo’s theory of comparative advantage holds that a country can maximize its own economic well- being by specializing in the production of those goods and services it can produce relatively efficiently and enhance global efficiency through its participation in (unrestricted) free trade.


Q27- Describe Social Darwinism? (3)

Answer:

Social Darwinists had a different take on the utilitarian justification for free markets. They argued that economic competition produced human progress. If governments were to interfere in this process, they would also unintentionally be impeding human progress. Weak firms must be weeded out by competition, they claim. The basic problem underlying the views of the social Darwinist, however, is the fundamental normative assumption that survival of the fittest means survival of the best. That is, whatever results from the workings of nature is necessarily good. The fallacy, which modern authors call the naturalistic fallacy, implies, of course, that whatever happens naturally is always for the best.

Q28- Feature of market economy

Answer:

Majority of a nation’s land, factories, and other economic resources are privately owned, either by individuals or businesses.

  • Features of a Market Economy
  • Free choice: individuals have purchase options.
  • Free enterprise: companies can decide what to produce and which markets to compete in.
  • Price flexibility: prices rise/fall reflecting supply and demand.
  • Focus on China


Q29- Define Limitations of Locke? Or Locke's critics focus on four weaknesses in his argument. Discuss 5 marks 

Answer:

The assumption that individuals have natural rights: This assumption is unproven and assumes that the rights to liberty and property should take precedence over all other rights. If humans do not have the overriding rights to liberty and property, then the fact that free markets would preserve the rights does not mean a great deal. 

The conflict between natural (negative) rights and positive rights: Why should negative rights such as liberty take precedence over positive rights? Critics argue, in fact, that we have no reason to believe that the rights to liberty and property are overriding. 

The conflict between natural rights and justice: Free markets create unjust inequalities, and people who have no property or who are unable to work will not be able to live. As a result, without government intervention, the gap between the richest and poorest will widen until large disparities of wealth emerge. Unless government intervenes to adjust the distribution of property that results from free markets, large groups of citizens will remain at a subsistence level while others grow ever wealthier. 

Individualistic assumptions and their conflicts with the ethics of caring: Locke assumes that people are individuals first, independent of their communities. But humans are born dependent on others, and without caring relationships, no human could survive. The degree of liberty a person has depends on what the person can do. The less a person can do, the less he is free to do. But a person's abilities depend on what he learns from those who care for him as well as on what others care to help him to do or allow him to do.


Q30- What traits are the valuable parts of person’s morally good behavior?

Answer:

A moral virtue is an acquired disposition that is a valuable part of a morally good person, exhibited in the person's habitual behavior. It is praiseworthy, in part, because it is an achievement whose development requires effort. According to Aristotle, moral virtues enable humans to act in accordance with their specific purpose.


Q31- Define Factors of Social Responsibility? 3 marks 

Answer:

 


Q32- Natural rights that a free market preserved ? 5 marks 

Answer:


Q33- Sometimes Care and Justice has conflict , give an example and suggest the guidelines to avoid this conflicts. (marks 5)

 

Answer:

 


Q34- Is Free Competitive markets has bad impact on ethics of care? discuss briefly. ( marks 5)

Answer:

 


Q35. Should we interpret morality as the basis of certain principles or as a cultivation of dispositions and traits? Explain your arguments with strong reasons. 5 Marks

Answer:

 

Q36. Describe two neutral rights of free market economy 

Answer:

 

Q37. Describe both versions of Kant categories imerative

Answer:

 

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