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Saturday, March 19, 2005
  Questions for Menger's Principles of Economics (Chapter 1)
One of my long-range goals in life is to gain a solid understanding of economics. Part of that involves reading many of the important works of the great economists. Right now I'm reading Carl Menger's classic Principles of Economics. As a means of solidifying my understanding of Menger's work, I'm developing questions for each chapter of the book (since I couldn't find any on the internet when I looked).

I've just finished the questions for Chapter 1, which I'm posting here. Comments are welcome, especially from any readers who have read the book. I'll be posting my answers to these questions in a couple of days.

Chapter 1: The General Theory of the Good

Sec. 1 The General Theory of the Good

  1. Why does Menger make the distinction between "useful things" and "goods"? What is an example of something that is a "useful thing" but not a "good"? (pg. 52)

  2. What four prerequisites does Menger list for a thing to "acquire goods-character"? (pg. 52)

  3. If you had an automobile, but no gasoline, would that the automobile still be a good, according to Menger? Why not?

  4. What makes something an imaginary good? List some examples of imaginary goods. (pg. 53)

Sec. 2 The Causal Connections Between Goods

  1. What distinguishes a "good of the first order" from a "good of the second order"? Give some examples of both, and of higher "order" goods.

  2. Are some goods inherently "higher" order than others? Why or why not? Can some goods function at multiple levels in the "causal nexus" of goods? Give an example.

Sec. 3 The Laws Governing Goods-Character

Part A

  1. Menger writes, "it is never in our power to make use of any particular good of higher order for the satisfaction of our needs unless we also have command of the other (complementary) goods of higher order." Why not? (pg. 59)

  2. If one possesses some higher order goods for the production of an automobile, but not all, do the higher order goods necessarily lose their good-character? If not, why?

  3. Menger writes, "The question of the dependence of the goods-character of goods of higher order than the second upon the availability of complementary
    goods is more complex." This would imply that possession of a good of the fifth order, and its complementary goods of the fifth order needed to produce a good of the fourth order, would not by itself establish their goods-character. Why is this so? (pg. 60)

Part B

  1. If a human need disappears, a good of the first order which could only satisfy that need would lose its goods-character; is such a loss necessarily applicable to goods of second, third and nth order? Why or why not?

Sec. 4 Time and Error

  1. What three factors does Menger stress in relation to uncertainty (and the possibility of error) in production?

Sec. 5 The Causes of Progress In Human Welfare

  1. Why does Menger contrast the division of labor in a primitive collecting economy with the division of labor in a more advanced economy? If both economies are arranged around the division of labor, what explains the superior productive powers of the advanced economy?

Sec. 6 Property

  1. What does Menger mean when he states that, "all the goods an economizing
    individual has at his command are mutually interdependent
    with respect to their goods-character..."? (pg. 75)

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