Each part carries equal marks. 2 pages per each question. Q1. Key topics Blaug vs. Krugman Blaug - economics is sick/dismal science Believes gmae theory, general equilibrium and neo-classical economists are barking up the wrong tree. Is there any progress in modern Economics? Does it Solve questions that are relative to the real world? Krugman, Solow, Arrow - defenders of neo-classical economics Krugman- supporter of story telling in economics Show both sides of argument Q2. Explain the market for lemons model Asymetric information Adverse selection Policy implications Akerlov''s solutions- Use other examples as well as cars, e.g. insurance. Show how Market for lemons leads to sub optimal amounts being traded or in extreme examples complete market failure. Criticise model building- too symplistic/unrealistic. Does that matter? Quote Sugden. Credible worlds, status ..... Signalling- e.g. how guarantees can overcome asymetric information Q3. Becker- New Home Economics Black Box- family was modeled as a single person before becker. No mechanism for modeling the division of labour between the family Family treated as a factory with inputs and outputs Allocation of time- who has the comparative advantage in the market and non-market work. Changes our views on the opportunity cost of time Explains rise in divorce rates, falling fertility rates. Not usually associated with economics Critiques- feminists (outside paradigm) Polack Feminist critique re-inforces status quo Becker''s model is free from bagage Ignores history relating to womans rights and socialisation In Becker model the distribution of income between family doesn''t effect consumption. A theory that has been disproved.