ECON 356

In Class Exercise Fourteen - Critique of the Mainstream Theory

1.  Explain one reason non-economists often criticize the mainstream economist's model of markets (perfect competition and monopoly).

2.  Marxists criticize mainstream economics by saying that people really don't "act in their own self interest" - what do they mean?

3.  Austrian economists differ in many ways (from mainstream economists) - but what three things do they emphasize that mainstream economists do not?  Be specific.

4.  Austrian economists often criticize mainstream economics on the basis that the formalization of a theory often leads one to "completely miss the problem at hand."  Give an example.

5.  How does Hayek define competition?  Be specific.

6.  Why does Hayek say there is no competition in the model of perfect competition?

7.  Given Hayek's definition (or model) of competition, why is it impossible to "judge" the model (in a sense)?

8.  Explain why/how the "time element" is important to Hayek's competition.  Relate this to the concept of a "monopoly price."

9.  Discuss the concept of efficiency by comparing/contrasting the (1) utilitarian, (2) means/ends  and (3) ethics views.