Check the weights given each, and answer appropriately (i.e., more points implies a longer essay).  Both the quality and the content of your writing matters!  You must demonstrate what you have learned from the lecture and the readings. Use a large blue book, and put your name on only the outside front cover.  You must finish by 12:30 pm.

I.  (50%) Longer Essay Questions:  Answer Two of Three
 
A.  (25%) What is market failure, and what are the specific reasons why it occurs?  How might government intervention potentially improve economic efficiency?  Give examples.  What is public failure, and what are some specific reasons why it occurs?  How might public failure limit the potential benefits of government intervention?  Give examples.

B.  (25%) Give a brief explanation of the Classical, Marxist, Neoclassical, and Evolutionary models of economic growth and structural change. Consider what causes growth and change, what the ultimate forecast may be, and the extent to which we choose our economy, our institutions, our technologies, or our policies, or whether history chooses for us?

C.  (25%) Carefully explain Marx’s theory of capitalism, and explain why he predicted it would inevitably self-destruct.  Explain the theory as well as the process it predicts.  What are some of the major flaws in the theory?  Who were the Revisionists, and how did they attempt to alter Marx’s theory?  What were Lenin’s major contributions to the Marxian theory of capitalism?  How did these contributions answer any of the criticisms of Marx’s theory?

II.  (50%) Short Essay Questions:  Answer Both

D.  (10%) Explain, compare, and contrast Adam Smith’s Invisible Hand with the Prisoner’s Dilemma model.  Under what circumstances might either apply?  What does each imply for the appropriate role of government, and why?

E.  (10%) Explain, compare, and contrast Olson's bandit model versus Locke's social contract. What are their implications for the objectives of state intervention?  Under what circumstances would they have similar implications?

III.  (30%) Short Descriptions: Answer 10 of 12
 (3% each)  In two to three articulate sentences each, define and explain each of the following, with some comment on their importance, context, or relevance.  Clearly mark which two you are dropping.  If you answer all 12, I will drop the last two.

   1. Arrow’s General Impossibility Theorem
   2. Capitalism
   3. Coase Theorem
   4. Creative Destruction
   5. First Fundamental Theorem of Welfare Economics
   6. Feudalism
   7. Gershchenkron effect
   8. Hegelian Dialectic
   9. Imperialism and the Weak Link
   10. Madisonian Liberalism
   11. Surplus Value Theory
   12. Theorem of the Second Best