(Riddell, et. at., 2011, p. 47)
[Adam] Smith believed that laissez-faire capitalism would be self-regulating via the invisible hand. Develop an example that illustrates these principles. Using your example, evaluate Smith’s argument.
Laissez-faire capitalism is an economic market where the government has no control over. There is free or gratis entry and exit in the economy. The market involves buyers and sellers in the market to control prices. Assuming that there are many types of matchboxes available in the market and; therefore, the buyers have a variety to choose. For example, matchboxes A, B and C are all available for buyers in the market. When the price of matchbox A falls the buyers will tend to change their taste and buy much of the matchbox A than B and C. It makes the sellers of the matchboxes Band C lower their prices.
(Brue and Grant, 2013, p. 105)
Succinctly summarize Thomas Malthus’ theory of population and relate it to his position on the poor laws.
Malthus argues that if population increases uncontrollably, the population growth rate will be more than the rate of food production. This is true because as the population grows the number of resources reduce. This is because many people will not find where to work and be able to produce food. The depletion of land will leave people homeless and with lack of natural resources. However, if the population is under control, the usage of resources will reduce. The reduced population is easy to feed and control.
Explain David Ricardo’s theory of rent. Why did Ricardo argue that economic progress would come to an end over time?
David Ricardo says that rent is that portion of produce of the earth paid to the house owner because of the original and unchangeable powers of the sill. Theory of rent emphasizes the rent as the reward for the services of the land which is constant in supply. The original unchangeable powers of the sill include nature soil fertility, mineral deposits, and climatic conditions. Ricardo says that the economic growth will end because the natural resource will be over as time goes day by day. The depletion of land that is the greatest economic resource will result to poor economic growth and hence an end of the economic growth.
Explain Jeremy Bentham’s principle of Utility. What are the pros and cons of governments using his principle to make policies?
Jeremy Bentham’s Principle of Utility says that principle that tries to prove the happiness or unhappiness of an individual in relation to the intended action of the individual.
This helps the government to state the policies of controlling the consumption of alcohol and illegal drugs.