Econ 430 Exam 1 Practice Questions and Answers

Econ 430 Exam 1 Practice Questions and Answers When is an economy capitalized - ANSWERWhen most or a substantial portion of production are in price hands rather than the government State guilded capitalism -how does it occur -problems - ANSWEROccurs: government decides which industries will grow (property rights are enforced) Problems: high chance of corruption, government selects the wrong winners, difficult to re direct Oligarchic capitalism -how does it occur -problems - ANSWEROccurs: government policies are designed to promote small groups Problems: corruption and unrest Big firm capitalism ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER 2024 Page 2/7 -how does it occur -problems - ANSWEROccurs: economic system is determined by firms and ownership is widely held Problems: less innovative and culture entitlement Entrepreneurial capitalism -how does it occur -problems - ANSWEROccurs: large number of firms. Creates a lot of innovation Problems: what happens to losers Which state has which form of capitalism State guided = Oligarchic = Big firm = Entrepreneurial = Pre- capitalist = - ANSWERState guided = Venezuela Oligarchic = Saudi Arabia ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER 2024 Page 3/7 Big firm = Japan Entrepreneurial = USA Pre- capitalist = Central America What is pre capitalism - ANSWERThis is when the government is weak and private property is not allowed. Capitalism and natural resources - ANSWERDifferent cultures and regions have different values for goods How do property rights relate to externalities - ANSWERIncentive to internalize externalities Internalization of externalities occurs when - ANSWERFirms take responsibility for an externality Internalizing externalities - ANSWERFirms reap the benefit or the cost of an externalities Total cost - ANSWERCost of obtaining quantity Total benefit - ANSWERTotal benefit received Marginal analysis - ANSWERCompare cost and benefits of doing more/less Marginal cost - ANSWERCost of one additional uni