Much of the work in the subdiscipline of political economy, which ...

[crobinson2013]

Much of the work in the subdiscipline of political economy, which is the main focus of this chapter, was pioneered by Nobel laureate James Buchanan.
 
  He believed that the basic framework of economic analysis was useful in studying political and governmental activity.Additional ly, he advocated that economists pay more attention to the political realm within which economic activity occurs.Here is a quote from the lecture he gave at the Nobel awards ceremony in 1986: The political economist who seeks to offer normative advice, must, of necessity, concentrate on the process or structure within which political decisions are observed to be made. Existing constitutions, or structures or rules, are the subject of critical scrutiny. Read Buchanan's Nobel lecture in its entirety at http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1986/buchanan-lecture.html Based on your reading, write a brief essay about what you think is the gist of his ideas concerning the relationship between economics and politics. Note:This is not an easy read, but you will still be able to glean much of the essence of Buchanan's argument if you read it carefully.

Question 2

The extra cost associated with undertaking an activity is called
 
  A) opportunity cost. B) foregone cost. C) marginal cost. D) net loss.

[nekcihc358]

Answer to Question 1

A well-written essay should at least mention some of the following elements of Buchanan's thought:
 Economists need to pay more attention to the political and institutional structure within which political as well as economic decisions are made.
 The proper study of both economics and politics must take into consideration the constitutional foundation of economic and political action.Political as well as economic agents operate within rules and constraints that transcend the particular activity in which they are engaged.Hence, we cannot divorce the political and legal context of action from the specifics and results of action.
 The principle of individual self-interest, which is fundamental to economic analysis, is equally valid in the context of political analysis.
 Individuals subject themselves to the authority of government because they believe it is ultimately in their self-interest.
A-head: CONFLICT OF INTEREST AND POLITICAL ECONOMY and OTHERS THROUGHOUT THE CHAPTER
Concept: The field of political economy

Answer to Question 2

C