3. CATALLAXY AND PUBLIC CHOICE THEORY

Question 1

The properties of a market (prices, division of labor, growth, etc.) are outcomes of the diverse and disparate goals of the individuals in a community

Answer 1

Catallaxy

Question 2

Theorist that explained the market by using an analogy between the household and the state

Answer 2

Aristotle

Question 3

To direct a single household

Answer 3

Oikonomia | theorist: Aristotle

Question 4

Defined catallaxy as the order brought about by the mutual adjustment of many individual economies in a market

Answer 4

Friedrich Hayek

Question 5

A marketplace of ideas, especially a place where people holding diverse political ideologies come together to gain deeper understanding of a wide range of political orientations

Answer 5

Catallaxy

Question 6

Use of economic tools to deal with politics

Answer 6

Public Choice Theory

Question 7

Considered as positive political theory; focuses on political behavior such as self-interested agents (voters, politicians, bureaucrats) and their interactions

Answer 7

Public Choice Theory

Question 8

This theory involves concepts of: standard constrained utility maximization, game theory, decision theory, and social choice theory

Answer 8

Public Choice Theory

Question 9

A theory applied in policy which holds that government as made up of officials, who besides pursuing the public interest, might act to benefit themselves

Answer 9

Public Choice Theory

Question 10

A policy is acceptable if the benefits of the gainers would be able to compensate for the losses of the losers

Answer 10

Compensation rule

Question 11

An economic state where resources cannot be reallocated to make one individual better off without making at least one individual worse off

Answer 11

Pareto-optimality

Question 12

Resources are allocated in the most economically efficient manner, but does not imply equality or fairness

Answer 12

Pareto-optimality

Question 13

For a rational, self-interested individual, the costs of voting will normally exceed the expected benefits. Because the chance of exercising the pivotal vote (i.e., in an otherwise tied election) is minuscule compared to any realistic estimate of the private individual benefits of the different possible outcomes, the expected benefits of voting are less than the costs

Answer 13

Paradox of voting or Downs paradox