Me, Myself, and Why Problem Set
Lillian Flloyd
Economics 214-D16
March 27, 2013
Liberty University
Bulls, Bear, and Golden Calves
Chapter Two: Me, Myself, and Why
1. What is the difference between self-interest and selfishness? Why is this distinction important when considering the competitive market economy as appropriate for society? Self-interest is looking out for your best interest and finding the best possible alternatives that will benefit yourself in the business world. Selfishness is putting your own interests above the interests of others and making decisions solely based on how they will benefit you. This distinction is imperative in considering the competitive market that is appropriate for society because you need to make sure that you are looking out for yourself but at the same time you should not make market decisions based solely off your own selfish interests. A selfish business man or woman will never be successful in the long run.
2. Does your textbook present only positive economics and avoid any normative economics? If not, give some examples of normative economics covered in your textbook. The textbook presents both positive economics and normative economics. An example of normative economics that is used in the textbook states “a value-free interpretation [of economics] leads to all sorts of abuses” (42). Normative economics incorporate subjectivity in to their analysis. Normative economics are heavily influenced by value judgment as well as theoretical situations. Normative economics are the opposite of positive economics.
3. What did Adam Smith believe serves to curb self-interest in an economy? “People care what others think of them and it is this desire for the good opinion of others that constrains people in their pursuit of self-interest” (41). Adam goes on to say, “this constraint is reinforced by competition and by the jurisprudence system” (41). Smith believes that others opinions shape what they pursue. Smith
Economics 214-D16
March 27, 2013
Liberty University
Bulls, Bear, and Golden Calves
Chapter Two: Me, Myself, and Why
1. What is the difference between self-interest and selfishness? Why is this distinction important when considering the competitive market economy as appropriate for society? Self-interest is looking out for your best interest and finding the best possible alternatives that will benefit yourself in the business world. Selfishness is putting your own interests above the interests of others and making decisions solely based on how they will benefit you. This distinction is imperative in considering the competitive market that is appropriate for society because you need to make sure that you are looking out for yourself but at the same time you should not make market decisions based solely off your own selfish interests. A selfish business man or woman will never be successful in the long run.
2. Does your textbook present only positive economics and avoid any normative economics? If not, give some examples of normative economics covered in your textbook. The textbook presents both positive economics and normative economics. An example of normative economics that is used in the textbook states “a value-free interpretation [of economics] leads to all sorts of abuses” (42). Normative economics incorporate subjectivity in to their analysis. Normative economics are heavily influenced by value judgment as well as theoretical situations. Normative economics are the opposite of positive economics.
3. What did Adam Smith believe serves to curb self-interest in an economy? “People care what others think of them and it is this desire for the good opinion of others that constrains people in their pursuit of self-interest” (41). Adam goes on to say, “this constraint is reinforced by competition and by the jurisprudence system” (41). Smith believes that others opinions shape what they pursue. Smith