Economics

Economics

Introduction

Book publishing scholar, teacher and journalist Charles Wheelan looks at what surrounds us always and everywhere - the economy. But Wheelan tries to speak to the reader on this difficult and dull subject in a plain language - without the vague definitions of complex plots and intricate equations. The author exposes the way the economy works, using numerous examples from our daily lives, by the denial of basic economic concepts of secrecy and provides answers to many questions. The book argues about the basic laws that apply in any society where goods, services, and money are applicable and shows how these laws are manifested in the form of such things as wealth and poverty, the various types of discrimination, environmental destruction and political manipulation. The author put forwards various paradoxical examples that conflict with our "everyday" common sense. One of them includes the scenario, when the United States tried to fight child labor and banned imports from third world countries where it is used; however, this act does not improve the lives of children and forced them to go to the panel. In addition, this book can be used as an introduction to the economy, as it simultaneously explains the basic concepts (e.g., inflation, GDP, the discount rate) and the principles of financial markets and the U.S. Federal Reserve.

Discussion

One of the main points Charles Wheelan argues is the rhetorical question, “Who feeds Paris?”. He is trying to explain how the modern economy works, which is all about the prices. The Author uses the example if Patrons start ordering more of the sashimi appetizer, the restaurateur will notice the popularity and place a larger order with his fish wholesaler. The new popularity and demand of the fish will in turn make the wholesale price to go up. As a result, the fisherman will be paid more for their catch of the more popular fish. One very important assumption the Author makes is that individuals act to make themselves as well off as possible. Individuals seek to maximize their own utility. A general understanding is that people do whatever gives them satisfaction. In turn, it influences people's decisions. Another powerful assumption made by the Author was that firms try to make as much money as possible. Firms take inputs and combine them in a way that adds valve. The Author used the example of Brad Pitt, trying to show a powerful feature of a market economy that directs resources to their most productive. The Author asked “Why doesn't Brad Pitt sell automobile insurance?”, because Brad Pitt would make more money in Hollywood than selling insurance policies.

One more main point is made with the discussion of the term “price discrimination.” Researchers believe that “price discrimination” is a genius idea. Selling the same item at different prices to different people. Why would firms do that? Consumers try to make themselves as well off as possible and firms try to maximize profits (Wheelan 2002).

Incentives are important because it was induces action or motivates ...