Self-study
P1
David Warsh's book describes a great contradiction inherent in economic theory since 1776, when Adam Smith published . ███ ██████ ██ ████████ █████ █████ ██ ███ ████████ ███████ ███ ███ ███████ ███ ███ █████████ █████
Intro topic ·
Warsh's book about conflict between Pin Factory and Invisible Hand
Conflict was part of economic theory since Adam Smith's Wealth of Nations.
P2
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Pin Factory ·
Increased efficiency through increased size
Pin factory's employees can make more by specializing on narrow tasks.
Invisible Hand ·
Acting out of self-interest can lead to common good
P3
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Conflict ·
Increasing returns from scale (Pin factory) leads to monopoly, which means Invisible Hand doesn't work
Invisible Hand requires many competitors in an industry.
Assumption underlying idea that free markets always get it right ·
Returns to scale are diminishing, not increasing
This assumption is the opposite of the Pin Factory model.
P4
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Why Pin Factory was de-emphasized ·
The model of diminishing returns was easier to represent mathematically
The Pin Factory model was more difficult to represent mathematically.
P5
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Pin Factory now mainstream ·
Once it could be described with enough math rigor, Pin factory entered mainstream
Passage Style
Single position
Spotlight
17.
The main purpose of the ██████ █████████ ██ ██
a
critique a theory ██████████ ██ ███████ ███ ████████ ███████ ███ ████████ ███████████
The author doesn’t critique anything in P4; she merely explains why the Pin Factory model was de-emphasized in favor of the Invisible Hand.
b
explain a difficulty ██████████ ████ ████████ █ ██████████ ████████ ██████████
This is the best answer. The author explains why the Pin Factory was de-emphasized by explaining a difficulty associated with modeling the Pin Factory.
c
outline the intuitions ██████████ █ ██████████ ████████ ██████████
The author doesn’t outline the “intuitions” supporting the Invisible Hand. She explains why the Pin Factory was de-emphasized. It’s not clear that economists preference for mathematical rigor is an “intuition” supporting the Invisible Hand.
d
describe the tensions █████████ ████ ████████ ██ █████ ███ █████████ ████████ ███████████
P4 doesn’t describe tensions resulting from modeling the Pin Factory and Invisible Hand. It explains why economists de-emphasized the Pin Factory model in favor of the Invisible Hand.
e
refute an argument ███████ █ ██████████ ████████ ██████████
The author doesn’t refute an argument in P4. She merely explains why economists de-emphasized the Pin Factory model in favor of the Invisible Hand.