6 Eco essay question

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1. It is widely believed that standard neoclassical (supply and demand) economics supports free-market
conclusions, while behavioral economics (game theory experiments, bounded rationality, Winner’s
Curse, imperfect information models, etc.) supports government intervention. Give two counterexamples. Explain your reasoning.
2. Name one concept from this class that you believe will have the largest private benefit to you as
either a consumer or a businessperson and explain your answer. Name and explain a concept from this
course which you believe would have the largest social benefit if it were widely understood. Finally, has
there been any concept discussed in class which you believe may be helpful either privately or socially
for students, qua students to understand? Explain.
3. Do you think the provision of public goods is more like a coordination game or a Prisoner’s Dilemma
game? Explain your answer, using a game theory matrix. Under what circumstances is public good
provision positive-sum and under what circumstances is it zero-sum? Give an example of positive-sum
public good provision that is still socially inefficient, and one of zero-sum exchange that manages to be
socially efficient.
4. A puzzle: The relationship between education and earnings is well-established; people with higher
levels of education earn higher incomes over their lifetimes, much more. Now think about your own
education, and be honest: What percentage of the material covered in your college courses is applicable
to your current or intended career? For myself, I would say I use around 30% of what I learned in my
Econ Ph.D. program, and I am an academic economist! If a high percentage (say, over 70%) of your
education applies to your career, then you are off the hook. If so, all you have to do is list the topics
covered in two recent courses and explain how you will or have used them in your work (10-12 topics
total would do it). If, like most people, the percentage is fairly low, then offer an explanation of why it is
that education leads to higher earnings, if so little of it is relevant to one’s intended career path.
5. On foreign aid to developing countries: a. What are the circumstances under which foreign aid can
help a developing country? Explain your answer in 3-4 sentences. b. How can foreign aid harm a
developing country? Explain in 3-4 sentences. c. What are the problems with sending money as foreign
aid? Explain in 2-3 sentences. d. What are the problems with sending goods as foreign aid? Explain in 2-3
sentences.
6. On international economic development: a. What do you believe is the key to international economic
development, i.e. what is the root cause of sustainable economic growth in poor countries? (2-3
sentences) b. What do you believe are the necessary conditions for growth, i.e. what conditions MUST
already exist for growth to occur? (2-3 sentences) c. How can the U.S. government best promote
economic growth in the developing world? (3-4 sentences)

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