Naked Economics Chapter 4 Essay

Charles states as his number one point that economics is really unpredictable. He uses the Coca-Cola Company as a fine example for this. That company starts of turning out to be loss and failure but within 10 years since it started it turned out to be very profitable. Charles also states that markets are extreme powerhouses over individual’s daily lives. Markets are also self-correcting because they use prices to allocate their resources. Individuals all work for their own self-interest so they can be better off in the society. One very good example the author provides is the Soviet’s socialist economy and how it failed because the bureaucracy controlled the economy, or basically he’s saying that

1. The first chapter in the book is about the market and its inner workings. The book briefly explains the idea of supply and demand, in which the price of a certain good or service will reach the point where all the demand is equivalent to the supply. However, the value of something is not determined by its necessity, but its desire within society, as seen by the difference in cost between a diamond and life giving water. Markets operate as they do because people try to maximize the amount of utility for themselves. Nevertheless, a strict rationalism model cannot be used for predicting all the occurrences of a market because of the ever changing behavior of people; thus economists must take precautions against

Chapter 8: A question that has stuck with Wheelan for years, asked by one of his peers was, “If people know so much about public policy, then why is everything so messed up” (175)? The reason for that is because it leads to something far more significant: Even when economists reach consensus on policies that would be to our advantage, they frequently run into political opposition. And when it comes to interest groups in politics, it pays to be small because the tail can wag the dog. This can have a huge impact on the economy. They are usually the most successful because the consequence of requests they receive are spread over a large, disunified group of people. Wheelan states that small problems begin to distort the simplest jobs of a market

When I first looked into finding this book I didn’t think much of it as I just thought it was just another type of text book or some sort. I was thinking that this would be some kind of auto biography or something I would not be interested in. In fact after reading this book I was stunned by the different views and aspects of economics that was explain and I would had never thought about them in that sort of way. This book covers a lot about we discussed in class. This book explains different examples of economic concepts that may be used in our daily lives. They

The book begins by saying that economics has more incorrect arguments than any other study. The two critical reasons for this are: People don’t care about the long term health of the public, as much as the care about the short term gain in their private lives. Special interest groups create or reuse correct-sounding fallacies to promote their viewpoint. Economics consists in looking at more than the immediate policy; It includes seeing the problems of the policy for not just one group but for all groups. The misconception that government spending boosts the Economy, is a result of a system of misconceptions. The fact that, we don’t address deficit spending and inflation and assume that public spending will be covered in taxes, is a delusional dream.

Chapter 3 introduces the law of demand, the law of supply, and the equilibrium markets for goods and services. We’ve also learned under what conditions the demand and supply curve will shift and the inverse relationship of price and quantity will cause movement along the demand curve. The chapter also included illustrations and impact of price ceilings and price floors. While Chapter 4 demonstrates the same principles - law of demand and law of supply also applies to the labour and financial markets.

Chapter 5 introduces the role and the effect of government policies on the market. While the free market is still the best entity in determining prices of goods, externalities such as government intervention often interfere. These interference represent the political aspect of economics where different parties, particularly buyers and sellers, have different interest and deem the current market as being unfair to them. The chapter also introduces taxes and its effect on supply and demand equilibrium. Calculation of the effect of taxes on market outcome is still a little confusing to me, but should be better with practice.

Capitalism is a social system based on the principle of individual rights. Politically, it is the system of laissez-faire (freedom). Legally it is a system of objective laws (rule of law as opposed to rule of man). Economically, when such freedom is applied to the sphere of production its result is the free-market. Capitalism might not be a perfect system, but it is not that evil. There is evidence proven that capitalism has helped the U.S. become the wealthiest nation. The primary concept of capitalism is totally devoted to the creation

In the book, Naked Economics: Undressing the Dismal Science talks about the basics of economics and how an individual or business can make the most of their overall happiness. Wheelan does the justice of taking professional economist ideas and language to the level of where beginner and/or individuals that are looking for an easier way to understand economics. Wheelan is has had a lot of experience with economics, by graduating and becoming a professor at Dartmouth College, as well as, the author and founder of the Centrist Political Party. He does a good job on breaking down a few of the implantations that economics has for an easy to explain. This

Chapter 1Chapter 1 is about the principles of economics. In economics, there are 12 main principles, which the system uses to continue to function. The 12 principles are Choices are Necessary Because Resources are Scarce, The True Cost of Something is its Opportunity Cost, ”How Much” is a Decision at the Margin, People Usually Respond Incentives, Exploiting Opportunities to Make Themselves better off, There are Gains from Trade, Markets move Toward Equilibrium, Resources Should be Used Efficiently to Achieve Society's Goals, Markets Usually Lead to Efficiency, When Markets don't Achieve Efficiency Government Intervention can Improve Society's Welfare, One Person's Spending is Another Person's Income, Overall Spending Sometimes gets out of Line with the Economy's

Chapter 4 1. According to the following table, which country is relatively more labor-abundant? Explain you answer. Which country is relatively more capital-abundant?

Tariffs are taxes, surcharges or duties on foreign products. An example of a tariff was the Hawley-Smoot Tariff around the Depression era.

Capitalism is defined as “an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.” The only social system corresponding with individualism is laissez-faire capitalism (“Publications”). Capitalism allows economic freedom, consumer choice, and economic growth. It is an economic system utilized in various countries, including the United States. Capitalism is beneficial to big businesses because they have better opportunity under a capitalist economy than under differing economic systems.

Just like socialism there are different varieties of capitalism. For example, Radical Capitalism, Classical Liberal Capitalism, and State Capitalism. Radical Capitalism is when citizens privately own all factors of production and make all decisions. Due to this there is no government which means zero regulations, no military, and basically chaos. Radical Capitalism is the definition of anarchy. Without a government support system this style is very flawed. Classical Liberal Capitalism is when the government exists so that capitalism survives. The people are still in charge but the government is there to back them up. Lastly, State Capitalism is when a vast amount of factors of production is owned by private citizens. State Capitalism is similar to the United States. However, there is Extreme State Capitalism which is also called Welfare State. The income taxes of a Welfare State are usually over 50%. A lot of the United States is owned by different private factors but they all regulated by the government. An example of a Welfare State would be Sweden. Capitalism hopes to achieve total freedom from government. Radical capitalists believe they are better off without the governments support. Some might believe that capitalism is the way to go but people need a government. Without a military or other

In simplest terms, a tariff is a tax. It adds to the cost of imported goods and is one of several trade policies that a country can enact.