What were the definitions of “economics” and “capitalism” that we discussed in class?

1. What were the definitions of “economics” and “capitalism” that we discussed in class?
Compare and contrast the definition we talked about in class and what you thought about
these concepts before class. In your opinion, which definitions do you think provide a better
description of economics and capitalism? (Yes, you can disagree with the book/lectures)/.
Explain your reasoning.
2. What are some of the different ways that the textbook defines “rationality” in economics?
Do you believe that “only self-interested behavior is rational”? Explain why or why not. Give
one or two examples to support your position.
3. What is the traditional definition of “economic efficiency”? What are some factors that
this definition overlooks? What is an example of a final goal of economic activity other
than efficiency? Give an example of a situation that would achieve this alternate goal but
wouldn’t be an efficient outcome.
4. What kinds of decisions would make a society’s production possibilities frontier expand
over time? Contract? Give an example of each.
5. What are the four essential economic activities? Define and describe each in your own
words. Give a real-world example of each type of activity from your own life.
6. What are the three different meanings of “markets” listed in your book?
7. Describe four real-world factors that can cause markets to result in outcomes that are
not ideal.
8. Thought experiment—what would happen if we all woke up tomorrow money (and thus,
markets) no longer existed? Please be as creative as possible in your answer! “Total
anarchy and chaos” and “we would figure out some other type of money” are not valid
answers. Come up with a totally different way of answering the three economic
questions: WHAT, HOW, and FOR WHOM.