Is Adam Smith Rolling Over in His Grave?

Economics

Mr. Bekemeyer

"Is Adam Smith Rolling Over in His Grave?"

(Economics by Example)

Please type your responses to the following questions:

1. What markets in your local economy most closely resemble Adam Smith’s ideal of perfect competition?

2. What characteristics does the hamburger market in your area share with a perfectly competitive industry? What conditions for perfect competition does it violate?

3. Given that the Justice Department and the Federal Trade Commission seek to promote competition between firms, what arguments do you suppose were used to gain their acceptance of the Kmart-Sears merger (if unfamiliar – look it up)? That is, how might this merger increase the level of competition in the long run?

4. What is the “invisible hand”?

5. Summarize (section of reading) – “Productive Efficiency”

6. Summarize (section of reading) – “Allocative Efficiency”

7. Summarize (section of reading) – “Distributive Efficiency”

8. For Adam Smith, why is competition so important?

9. Why does “Market Power Matter”?

10. Summarize (section of reading) – “Neglected Costs and Benefits”

11. Summarize (section of reading) – “Morality and the Market”

12. If someone where to ask you to describe Adam Smith’s work, what would you say?