Chapter 2

Question 1

The Calculation Problem

Answer 1

The problem of the utilization of knowledge which is never given to anyone in it’s totality

Question 2

Public Choice School

Answer 2

Expresses how self-interested politicians and government officials make deicsions

Question 3

Fallacy of Division

Answer 3

Thinking what is true for a group must be true for all the individuals of a group

Question 4

Authoritarian (choice)

Answer 4

a single individual or governing body makes decisions for the populace

Question 5

Democratic (choice)

Answer 5

Authoritarian choice made by individuals voting

Question 6

Government administrative costs

Answer 6

Sacrifice to pay gov. employees to monitor regulatory programs and enforce

Question 7

Compliance Cost

Answer 7

How much must be sacrificed to follow regulation

Question 8

Rent Seeking

Answer 8

individuals extending resources to prosper by using regulatory and legal systems

Question 9

Bootleggers and Baptists

Answer 9

2 groups fighting for regulations for two separate reasons because they both benefit

Question 10

Status Quo Minus Fallacy

Answer 10

we consider the status quo, eliminate one element of it,and conjure that this removed element has an effect we’ll never be compensated for

Question 11

Rational Ignorance

Answer 11

when the cost of educating yourself outweigh the benefits of having the knowlegde

Question 12

Law of Unintended Consequences

Answer 12

unseen costs to a decision

Question 13

What must the State know in order to manage the economy as well as free markets?

Answer 13

• Everyone’s preferences
• Scarcity of Resources
• Most Efficient Way of Producing

Question 14

Spontaneous Order

Answer 14

individuals organize themselves and interact efficiently if they are given the freedom to do so

Question 15

Curious Task of Economics

Answer 15

Demonstrating to men how little they know about designing economies