Political and Economic Forces

Question 1

What are the different formal institution pillars?

Answer 1

1. Regulatory Pillar - coercive power of government
2. Normative Pillar - values, beliefs and actions of other people influence
3. Cognitive Pillar - taken for granted and beliefs that guide behavior

Question 2

Bounded Rationality

Answer 2

The idea that rationailty is limited when individuals make decisions.

Question 3

Legal Systems

Answer 3

• Theocratic Law - Based on religious teachings
• Property Rights - Legal rights to use an economic property and derive income and other benefits from it.
• Common Law - precedents and traditions from previous judicial decisions.
• Civil Law - the system of law concerned with private relations between members of a community rather than criminal, military, or religious affairs.

Question 4

Economic Systems

Answer 4

• Market Economy - “invisible hand” of market forces all factors of production should be privately owned
• Command Economy - factors of production owned by the government
• Mixed Economy - a mix of market and command economy

Question 5

Trademark v Patent v Copyright v Title

Answer 5

1. Copyright - legal right given to originator or an assignee to print
2. Patent - legal right to exclude others from making ,using or selling an invention
3. Trademark - a symbol, word or words legally registered
4. Title - intangible construct representing a bundle of rights in a piece of property

Question 6

What are the informal instituiton pillars?

Answer 6

• Normative
• Cognitive