Naked Economics: Undressing the Dismal Science, written by economist Charles Wheelan, is a book that aims to provide a clear and concise explanation of economics to those who may be intimidated or overwhelmed by the subject. In Chapter 1, Wheelan introduces the fundamental concepts of economics and explains why it is important to study economics, even if you are not an economist.
One of the main ideas that Wheelan presents in Chapter 1 is that economics is essentially the study of how people, firms, and governments make choices. This includes decisions about how to allocate resources, such as time, money, and labor, in order to satisfy our wants and needs. Wheelan explains that economics can help us understand the trade-offs we face when making these choices, as well as the consequences of our decisions for ourselves and others.
Another key concept introduced in Chapter 1 is the idea of scarcity. Wheelan explains that because we have limited resources, we must make choices about how to use them. This means that we cannot have everything we want, and must choose what is most important to us. This concept of scarcity is at the heart of economics, and is what drives the decisions we make about how to allocate our resources.
Wheelan also discusses the role of the market in economics. He explains that the market is a system in which buyers and sellers interact to determine the prices of goods and services. This market process helps to allocate resources efficiently, as prices reflect the relative scarcity of different goods and services. However, Wheelan also notes that markets can sometimes fail to allocate resources efficiently, and that government intervention may be necessary to correct these market failures.
In addition to these core concepts, Chapter 1 of Naked Economics also introduces the idea of opportunity cost, which is the cost of giving up the next best alternative when making a choice. This concept helps to illustrate the trade-offs we face when making decisions, and helps to explain why we may choose one option over another.
Overall, Chapter 1 of Naked Economics provides a clear and concise introduction to the fundamental concepts of economics. It explains why economics is important, and how it can help us understand the choices we make and the consequences of those choices. Through its explanations of scarcity, the market, and opportunity cost, it provides a foundation for further exploration of the subject.
Review your schedule with a parent or guardian. One example is splurging a big flat screen TV on a credit card but still knowing that you have added to your credit score which will affect you in the future. Purchase of the book is not required, but recommended. Throughout the book, the author uses easy-to-understand language and vivid examples to illustrate his points in strategic places maintaining a sense of lightness with the readers in reading the material. For example, a law intended to reduce the amount of smog in Mexico City imposed restrictions on which cars could drive on which days, tracked through license plates.
For example, the people who sell cheap umbrellas in New York City when it starts to rain get profits because people walking by need to stay dry. Truffles which can only be cultivated from the wild represents a natural barrier while Viagra benefits from patent protection, a legal barrier. When the bubble burst however, families could no longer pay their mortgages nor could they sell their houses, this cycle led to collapse. But we didn't even have to say the name! The Power of Markets: Who feeds Paris? Firms are people or groups of people who decide what, where, and how to produce products and combine products in a way that adds value. It makes us richer and healthier. . The Competitive Firm 15.
The Theory of Consumer Choice 22. They influence everyday action with emphasis through human's natural characteristic to adapt. Second it is very hard, if not impossible to exclude persons who have not paid for the good from using it you cannot stop a ship captain from seeing a lighthouse. He also includes insurance, investing, and other programs that could result in a major loss of money, though not in most cases. Fishermen who hunt without constraint can deplete a fish population.
Naked Economics Chapter 1 Vocab and Examples Flashcards
Set due dates for each chapter and each part of the assignment. In other words, all products must be sold on a same fair price. How do we slice up the pie? It could simply just to create a better artificial balance. Prices Reflect Supply and Demand When a sale is made, firms and individuals connect and maximize their utility against each other. We work less and produce more.
Prices typically reflect marketers' consideration of product-related costs, consumer preferences, and competitors' prices. Individuals all work for their own self-interest so they can be better off in the society. . The Costs of Production 14. A person must choose on option over another and that choice costs them time, money, or another opportunity. If an item had great demand, and low supply, it is most likely due to effects of scarcity of said item.
If something such as a new fad for throwing gallons of milk at walls occur, then supply and demand of milk gallons increase, fluctuating the price and worth of milk; as milk was something available for nutrients, as now it's a worthless container filled with white explosives. Each country—and each person within it—must decide for themselves where they want to draw that line: For example, will we end up working 50 hours a week and earning a lot of income, or will we decide we prefer to work 30 hours a week and enjoy what we can of our lesser income? Trans-national recession - When the US economy weakened, we bought less goods abroad and therefore the recession quickly spread globally. Supply, Demand, and Government Policies 7. To a large extent, the world is economically interdependent. Economics is the study of how we do that. And that is the punch line of capitalism: The market aligns incentives in such a way that ind duals working for their own best interest-passing out Coca-Cola, spending years in graduate school, planting a field of soybeans, designing a radio that will work in the shower-leads to a thriving and ever-improving standard of living for most though not all members of society.
By 1995, per capita consumption of Coca-Cola in the former East Germany had risen to the level in West Germany, which was already a strong market. When supply is great, demand quantity will also increase. Instead of determining these things through a centralized authority who doles out resources as in a communist economy , a market allows. The notion that smaller government is always better is simply wrong. Economists sometimes ask, "Who feeds Paris? Specialization is what makes us productive. Please check your work for complete Ap Economics Assignment AP Economics September 2013 Naked Economics: Undressing the Dismal Science Chapter 1: The Power of Markets -The two basic assumptions that economists make about individuals and firms are that individuals act to make themselves as well off as possible, and that firms attempt to maximize profits. For instance, did you look at online reviews for the item or service, find those reviews were negative, and decide not to buy the item? Application: International Trade 10.
Often, in markets based on communal resources, people have incentives to cheat the system and acquire as much of the resource as they can before others do. However that is how our economy runs, and firms just happen to be the place for it all to organize. Policymakers did not anticipate that people would buy new cars and hold on to older cars with poor emissions to continue driving. Pharmaceutical companies invest millions in research and development with confidence that a patent will protect their discovery and enable them to profit from their efforts. By understanding how we respond to incentives and the psychological instincts that steer us, we can better understand how market forces work and how governments and firms can use incentives to foster a healthy economy. Although we recognize this as obvious, many of our policies are designed in ways that do the opposite.
Naked Economics Book Summary by Charles J. Wheelan
A neighborhood fruit vendor has exactly what his customers want every morning-from coffee to fresh papayas-even though those products may come from ten or fifteen different countries. The early airline industry which had fixed prices, competed on the basis of providing good food and comfort. In some cases, the Coca-Cola representatives were literally passing bottles of soda through holes in the Wall. Called deadweight loss ex. Asset prices already reflect all available information, thus it is difficult, if not impossible, to choose stocks that will outperform the market with any degree of consistency, yet people believe they have the edge all the time.
As more professional opportunities become available to women, the costs of having children rise. Government controls many variables the apply in economics. If the price of the item is fairly high, then that shows that there is a strand desire for the product by the people. In a sense, it was Adam SlTlith's invisible nd passing Coca-Cola through the Berlin Wall. We can continue to work the same amount while producing more, produce the same amount by working less, or strike some balance.