BCOR 1015 Final Exam Test Questions and Answers Rated A
What are Hayeks views on planning and decision making? he believes in decentralized knowledge
HAYEK: what is decentralized knowledge? spreading knowledge amongst people
is Hayek against centralization? yes
price signals are used to make decisions and send infor-
HAYEK: how does the price system coordinate resources?
mation to other groups because prices are lower or higher
signals wrapped up in incentives; prices can constantly
what are price signals?
adapt and update in response to new information
benefitting from peoples ignorance; buying something
HAYEK: what is arbitrage?
cheap at a flea market then re-selling at a higher price
Does Hayek argue that arbitrage is moral or immoral? arbitrage is moral if its helping allocate resources
What article did Cohen write? Why not socialism
COHEN: what is the bourgeois equality of opportunity removal of socially constructed status restrictions
removal of the disadvantages of circumstances, even if not
COHEN: what is the leftest liberal equality of opportunity socially constructed (but leaves ditterences in opportunity
related to "naive or inborn traits")
corrects for all unchosen disadvantages, that is, for which
COHEN:what is the socialist equality of opportunity the agent cannot be held responsible, whether they be
disadvantages
1. Laws (formal) 2. Unchosen Social Disadvantages (infor-
mal) 3. Raw Talent
What were the three inequalities Cohen thought existed?
Because of these 3 things, he wanted to diminish the
equality of opportunity
COHEN: what is the relationship between equality and According to cohen reducing inequality involves both
community? equalizing and also a redistribution policy
Is Cohen a socialist? yes
he thinks inequality should be allowed due to practical and
FRIEDMAN: is income equality or inequality fair?
moral reasons
COHEN: what did he believe in, in regards to redistribu-
tion?
, Believed in redistribution through a flat tax rate - equality
People w/ higher incomes get taxed more than poor peo-
ple and that is UNFAIR
COHEN: if people are willing or prefer to work harder jobs,
SHOULD
they should or should not be paid more?
How does Friedman conceptualize capitalism? believes strongly in free-market capitalism
Economic freedom means not only the right of individuals
How does Friedman think about redistribution, freedom,
to act freely in the market, but for markets themselves to
ethics, and market eflciency?
be free of government regulation
What is the tragedy of the commons? overpopulation= overuse of resources
Virtue Theory: although we all have self-interest, we still
have empathy and capitalists will achieve civic duty/benev-
What does Smith argue in regards to the pursuit of self
olence.
interests?
People acting in Self-interest ’increased market Productiv-
ity
the pursuit of self-interest in an open-access commons
what does Hardin argue in regards to the pursuit of self leads to ruin.
interests? Without controls on access and use of the underlying
resource, the tragedy of the commons is inevitable
Makes sure people don't infringe on others rights- social
welfare approach for positive human rights
What is the tradeott between eflciency and equality?
Maximum eflciency leads to low equality. Maximum
equality leads to low eflciency
a direct, unintended and uncompensated ettect on a third
what is an externality?
party by an individual
what is a positive externality? an externality that creates social benefits reaped by others
what is a negative externality
2/5
What are Hayeks views on planning and decision making? he believes in decentralized knowledge
HAYEK: what is decentralized knowledge? spreading knowledge amongst people
is Hayek against centralization? yes
price signals are used to make decisions and send infor-
HAYEK: how does the price system coordinate resources?
mation to other groups because prices are lower or higher
signals wrapped up in incentives; prices can constantly
what are price signals?
adapt and update in response to new information
benefitting from peoples ignorance; buying something
HAYEK: what is arbitrage?
cheap at a flea market then re-selling at a higher price
Does Hayek argue that arbitrage is moral or immoral? arbitrage is moral if its helping allocate resources
What article did Cohen write? Why not socialism
COHEN: what is the bourgeois equality of opportunity removal of socially constructed status restrictions
removal of the disadvantages of circumstances, even if not
COHEN: what is the leftest liberal equality of opportunity socially constructed (but leaves ditterences in opportunity
related to "naive or inborn traits")
corrects for all unchosen disadvantages, that is, for which
COHEN:what is the socialist equality of opportunity the agent cannot be held responsible, whether they be
disadvantages
1. Laws (formal) 2. Unchosen Social Disadvantages (infor-
mal) 3. Raw Talent
What were the three inequalities Cohen thought existed?
Because of these 3 things, he wanted to diminish the
equality of opportunity
COHEN: what is the relationship between equality and According to cohen reducing inequality involves both
community? equalizing and also a redistribution policy
Is Cohen a socialist? yes
he thinks inequality should be allowed due to practical and
FRIEDMAN: is income equality or inequality fair?
moral reasons
COHEN: what did he believe in, in regards to redistribu-
tion?
, Believed in redistribution through a flat tax rate - equality
People w/ higher incomes get taxed more than poor peo-
ple and that is UNFAIR
COHEN: if people are willing or prefer to work harder jobs,
SHOULD
they should or should not be paid more?
How does Friedman conceptualize capitalism? believes strongly in free-market capitalism
Economic freedom means not only the right of individuals
How does Friedman think about redistribution, freedom,
to act freely in the market, but for markets themselves to
ethics, and market eflciency?
be free of government regulation
What is the tragedy of the commons? overpopulation= overuse of resources
Virtue Theory: although we all have self-interest, we still
have empathy and capitalists will achieve civic duty/benev-
What does Smith argue in regards to the pursuit of self
olence.
interests?
People acting in Self-interest ’increased market Productiv-
ity
the pursuit of self-interest in an open-access commons
what does Hardin argue in regards to the pursuit of self leads to ruin.
interests? Without controls on access and use of the underlying
resource, the tragedy of the commons is inevitable
Makes sure people don't infringe on others rights- social
welfare approach for positive human rights
What is the tradeott between eflciency and equality?
Maximum eflciency leads to low equality. Maximum
equality leads to low eflciency
a direct, unintended and uncompensated ettect on a third
what is an externality?
party by an individual
what is a positive externality? an externality that creates social benefits reaped by others
what is a negative externality
2/5
