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Richard Carson
Economics

NOTE: The Final exam for this course will be in SA 518, 7-10 p.m., Friday the 19^th of August.

August 2011

CLASS TAKE-HOME ASSIGNMENT

CARLETON UNIVERSITY
Department of Economics

Econ 3807V

Instructor: R. Carson

Directions:

Please do each question below. The question weights are as indicated. This assignment, which is worth 12% of the course grade. Use graphs where you find them useful, but be sure to explain them. In general, be sure to explain yourself well enough that the grader understands you and knows that you know what you are doing. Finally, please type your answers double spaced, with adequate margins. Please draw your graphs neatly and legibly. Illegible answers will be considered incorrect. Sok scerencset

Questions:

1a. (30%). What was the Neolithic Revolution? Explain carefully what basic changes caused this "Revolution" and what basic changes in property rights accompanied it. In what fundamental way did society change? Why was it a necessary condition for the emergence of complex societies and civilization? Why is it called the "Great Divide?"

1b. (15%). How did the Neolithic Revolution increase specialization and division of labour? Why did it cause the emergence of bondage in many places?

2a. (30%). In 1970, the economic historian, Evsey Domar, said that it would be impossible to have at one and the same time "free" land, "free" labour, and a land-owning aristocracy. If "free" land means land that is in super-abundant supply relative to demand--and therefore has a zero price--and "free" labour means labour that is free of bondage, explain why this combination would be impossible.

2b. (15%). If land is "free" in the sense of the previous question, what three organizations of an agrarian economy are possible? Explain why these are possible and why they are the only three that are possible. Which factors determine which of the three will prevail at any given place and time?

2c. (10%). If bondage arises in conditions where land is free as above, what basic changes in economic conditions could bring about its peaceful demise? Would the result necessarily be to make labour better off? Please explain.

Answer key to class assignment

July 2011

MID-TERM EXAM

CARLETON UNIVERSITY
Department of Economics

ECON 3870V

Instructor: R. Carson

Directions: Please do each question below, noting the weights, which add to 100%. Use graphs where you find them useful, but be sure to explain them. In general, be sure to explain yourself well enough that the grader understands you and knows that you know what you are doing. Finally, please write on every other line. Sok szerencsét.

Questions:

1a. (10%) Show that communal property rights to a scarce resource have a destructive effect on that resource. Using a graph, please explain exactly what they destroy.

1b. (20%) What two basic methods of exclusion can be used to prevent this? Describe each, making sure to distinguish between them in terms of what determines prices and outputs and how prices and outputs are set.

How should we organize exclusion if we want to maximize the value of the resource? Explain. Give one potential advantage of the other basic method of exclusion. Give an example of when that advantage will not be realized.

2. Recently, some economists have re-interpreted the Soviet economy as an example of mercantilism.

a. (10%) What key features determine whether an economy is mercantilist? Which of these features was (were) said to be present in a Soviet-type economy? Which, if any, was (were) absent? Explain briefly.

b. (15%) In principle, Soviet-type economies were planned economies, with output and input quotas determining production levels and technology. In practice, the picture may have been a little more complex. Explain how one might build an argument that it was a market or quasi-market economy, in which irrational prices played a major role in determining outputs and therefore in undermining planning. What else contributed to output determination in the STE according to this (revisionist) view?

c. (5%) It was often noted in Soviet-type economies that increases in official prices did not relieve shortages. Does the re-interpretation of the Soviet-type economy as an example of mercantilism shed any light on this?

3a. (15%) What two basic views of the relative expansion of the public sector in market economies since World War II can we distinguish? Explain and compare them briefly. What feature of national income accounting makes it possible to have different views about the nature of this expansion?

3b. (10%) In particular, social insurance has been a rapidly-growing expenditure item. Briefly explain why, using a graph to assist you in your answer.

3c. (15%) What two basic types of economic growth can we distinguish in terms of the sources of economic growth? In this context, if we want to achieve sustainable economic growth, explain why it is important to be able to rely eventually on one of these types? Which type must be relied on eventually? Briefly explain why.

Answer Key Midterm

Welcome to Richard Carson's
Economics Website

The final exam will be held on the 19^th of August 7-10 p.m. in a location still to be announced.

Richard Carson
B850 Loeb Building
(613)520-2600, x1751.

E-mail: richard_carson@carleton.ca

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