Econ Essay Questions

  1. (Essay 1) Explain capitalism’s distinctive attitudes, and why they are important to make capitalism work well
    • Individualism
    • Entrepreneurship
    • Protestant work ethic
    • Consumer sovereignty
    • Flexible cooperation and non discrimination
  2. (Essay 1) Individualism
    • Belief in individual freedom and achievement
    • We make successful economic individuals into heroes: Steve Jobs & Warren Buffet
    • For capitalism to work, people must believe that it’s right to take individual responsibility for their lives
    • Can not always rely on gov’t to solve problems
  3. (Essay 1) Entrepreneurship
    Capitalism needs some people to be willing to innovate and take risks
  4. (Essay 1) Protestant Work Ethic
    People ought to work hard and do a good job even if the work is unpleasant
  5. (Essay 1) Consumer Sovereignty
    • Sovereign is a ruler
    • In capitalism, consumers rule
    • System tends to serve consumer desires
  6. (Essay 1) Flexible cooperation and non discrimination
    • Make contracts to cooperate, but have an attitude that no contract is forever
    • High willingness to adapt
  7. (Essay 2) Why does the U.S. invent so much new technology compared to other countries?
    • US consumers like new things and can afford to buy them
    • Businesses want to cut costs- more profit oriented than other countries
    • Business environment supports invention- emphasis on individual creativity
  8. (Essay 2) Why do U.S. businesses adopt new technology (innovate) faster than other countries?
    • More competitive free market than elsewhere- if your rival adopts a profitable technology or a new offering for customers, you need to do it too
    • Slow acting managers can be removed from power more easily- hostile takeovers are easier and more socially tolerated in US
    • US managers are more willing to be ruthless
    • US managers are willing ot learn ideas from other countries
  9. (Essay 3) What is social capital? Explain why high-social-capital (high-trust) economies may be more successful than low-trust economies.
    • Social capital- people’s capability and knowledge of how to work together successfully in building economic relationships
    • Hypothesis 1: cultures that have relatively high
    • amounts of social capital and trust will be more economically successful
    • Hypothesis 2: US social capital has been falling
  10. (Essay 3) Low-trust economies
    • Most businesses are family owned
    • Trust is natural within families
    • Punishment for non-cooperative behavior is easier inside a family because of emotional ties
    • Face potential limitations- lack of skills in the family, “I’m family, they can’t fire me”
  11. (Essay 3) High-trust economies
    • More chance for economic success
    • Bigger talent pool- even if started by family, it hires whoever is most talented
    • Access to more financial resources- large and vibrant stock markets. Investors are less afraid that you will steal their money so they are more likely to buy stock
    • Better government- good job providing public goods/services.  Work harder to treat everyone equally.  More resources for infrastructure
  12. (Essay 4) Discuss how Europe’s unemployment can be explained in terms of job creation problems
    • Employers believe wages are too high:
    • §  Companies do not wish to create jobs if a worker’s ware is higher thanthe revenue he or she would generate
    • §  Wages are high because of unions
    • §  Businesses also have to pay high employer taxes per employee to fund social welfare plans
    • Firing restrictions:
    • §  Reluctant to hire if they can’t fire
    • More difficult to create service sector jobs:
    • §  Restrictions on store hours
    • §  Restrictions on self employment
  13. (Essay 4) Attitude problems
    • Geographic immobility- European workers are less likely to move for a new job than US workers
    • §  Language barriers
    • §  Hard to become socially accepted
    • §  Expensive housing
    • §  Lack international connections
    • Anti-Work-Ethic Attitudes
    • §  Refused to take low paying jobs because it would hurt their status
    • §  Preference for leisure
    • §  High unemployment compensation- lowered incentive to find new job
  14. (Essay 4) World Changes
    • Technology change- computerization and automation destroyed low skilled jobs
    • Globalization- companies spread to knew markets for more profit
    • Aging populations- worry about pension crisis
  15. (Essay 4) Europe’s Policy Options
    • Keep the same system but create more jobs through gov action
    • Coverage to the US model, create jobs the way the US does
    • Accelerate unification of Europe
  16. (Essay 5) Japanese Management Style 

    Lifetime jobs-
    • 25% of Japanese men are promied lifetime employment. 
    • Must retire at age 55 or 60 (keiretsu).  
    • Encourage employees to quit 
  17. (Essay 5) Japanese Management Style 

    Lifetime jobs-
    • 25% of Japanese men are promied lifetime employment. 
    • Must retire at age 55 or 60 (keiretsu).  
    • Encourage employees to quit 
  18. (Essay 5) Japanese Management Style 

    The firm is seen as a family-
    • People hired based on education and skill
    • Hire males over females
    • Hire few married women
    • Hire few overweight people
    • Manager is seen as father figure
    • Managers ask about personal life
    • After hours drinking to bond
  19. (Essay 5) Japanese Management Style 

    Training Practices-
    • On the job training and rotation
    • Job challenges (no clear instructions)
    • More criticism than praise
  20. (Essay 5) Japanese Management Style

    Status Issues-
    • Wages and promotions- everyone on management track till age 30 
    • Equality/inquality- everyone on same level
Card Set
Econ Essay Questions
Econ Essay Questions