Naked Economics: Undressing The Dismal

The chapter starts by giving the example of how the head of Coca-Cola Europe decided to give away Coke to East Germans as the Berlin Wall was falling in 1989. This gamble, which began as a loss, eventually paid off for Coca-Cola. Six years later, the former East Germany had matched West Germany in the consumption of Coke, an excellent example of the power of markets. The author gives a simplistic explanation of the communist economy. There is no law of supply and demand. The price of an item is the same regardless of where one buys it. This is due to the fact that every business is paid the same by the government for selling a specific item regardless of the amount sold. Our economy is a market economy and economists make two important assumptions.

Author Wheelan writes, "Life is about trade-offs, and so is economics." Indeed, so is Naked Economics. This book promises to be a good introduction to economics for the layman. 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. Here is a summary of each of the 12 Chapters of the book Naked Economics: Undressing the Dismal Science by Charles Wheelan.

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

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.

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.

The definition of public goods is: A public good is an item consumed by society as a whole and not necessarily by an individual consumer. Public goods are financed by tax revenues. All public goods must be consumed

READ: Naked Economics: Undressing the Dismal Science, Charles Wheeland, W.W. Norton, 2003. Completely- cover to cover.

12. What advice about investing in the stock market did you find most interesting and/or useful?

1. The richer you are, the more you have benefited from economic changes over the past 30 years.

1. (10 pts.) Stella Ann Freeman is having a difficult time deciding whether or not to purchase a new car. How would understanding the concept of opportunity costs help her make a decision?

An important part of the book is the way the tone is set. The authors discuss complicated and occasionally controversial topics, but the narration uses a casual tone, which is unexpected for a book about economics. The conversational tone makes the ideas presented easier to understand for any reader. Since the book is written in a way that it feels as though the reader is being spoken to

Macroeconomic schools of thought would be prudent to accept certain aspects of the views of other schools of thought to better understand the scope of economic efficiency through the use of various models aimed at understanding the implications that all actions affect outcome. Like other economic schools of thought, Freshwater developed from previous schools of thought as new macroeconomic ideas were discussed and disputed.