Preview

Naked Economics

Satisfactory Essays
Open Document
Open Document
606 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Naked Economics
Katherine Piedra P4 09/12/13
Chapter 1: The Power of Markets 1. What are the two basic assumptions that economists make about individuals and firms?
First, we assume that all of these entities have unlimited wants. This assumption forms the basis of economics. It is the study of how entities try to fulfill these unlimited wants when confronted with limited resources. Second, we assume that all of these entities are rational actors. We assume that they typically act in ways that will help to achieve their goals. This allows us to understand their actions which we would not be able to do if we assumed that they constantly acted on the basis of whims. 2. What is the role and significance of prices in the market economy? What’s so great about a market economy anyway?
Prices in the market economy are extremely useful because they help gauge what consumers want and how badly they want it. High prices indicate strong consumer desire for that product while low ones indicate little interest. A market economy is so good because it corresponds with normal human behavior and allows for optimum allocation of resources. It may not be completely fair, but it is the most stable and best option compared to a communist system.

Chapter 2: Incentives Matter
3. Explain how each of the following relates to efficient outcomes in a market economy: Adverse selection, “perverse incentives”, principal-agent problem, and the prisoner’s dilemma.
4. So what’s the issue with the black rhinoceros and how can economics point to a possible solution?
Chapter 3: Government and the Economy
5. In your own words, explain the meaning of an externality.
6. Besides addressing externalities, what other important and beneficial roles does government play in our market economy?
Chapter 4: Government and the Economy II
7. What are the main reasons why government should only take a limited role in a market economy?
Chapter 5: Economics of Information
8. Whelan explains that basic

You May Also Find These Documents Helpful

  • Satisfactory Essays

    The economy is a very complex system in which consumers and retailers spend sufficient time to make themselves as wealthy as possible. In the chapter, the cost of something is giving up something to receive a product or service usually more than just money. Companies use different strategies to maximize profits like for an airline to distinguish between a business traveler versus a pleasure traveler. The concept of Supply and Demand is introduced with the example of a tuna fish and a salmon with the popularity of the tuna the supply of tuna goes down raising the prices of tuna. The concept of cost is appealing in that people will use a product…

    • 287 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    4. If the cost of producing a good for a household is below the market price the household should enter the market. The household should also look at the opportunity cost of producing the good. What are the trade offs of producing the good? Could the time be used in a more wise manner?…

    • 640 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Chap 16 Govt 2302

    • 1525 Words
    • 7 Pages

    7. Which of the following is the best description of the changing expectations of government's role in the economy since the 1930s? 2. People hold the government responsible for a healthy economy.…

    • 1525 Words
    • 7 Pages
    Good Essays
  • Good Essays

    Explain the difference between a positive and negative externality. In your analysis, make sure to provide an example of each type of externality. Why does the government need to get involved with externalities to bring about market efficiency? What solutions need to be provided for your examples?…

    • 1578 Words
    • 7 Pages
    Good Essays
  • Satisfactory Essays

    ECO 203 Week 3 Quiz

    • 645 Words
    • 3 Pages

    Discuss whether you favor a larger or smaller role of government in the economy. Refer to concepts found in t...…

    • 645 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    |Why is GDP not completely accurate in |Since GDP only measures output and not productivity other measures have been developed to look at economy’s |…

    • 865 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    3. In what ways did the American government promote the growth of the American economy in post bellum America? To what extent did they regulate business activity?…

    • 844 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    2. In the lesson you learned that a market economy is where the prices of services and goods are determined through a free system. Tell what you think an advantage and disadvantage is of this type of economy.…

    • 898 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Ap Economics Assignment

    • 1202 Words
    • 5 Pages

    -The thing that is so great about the market economy is that “the market economy is a powerful force for making our lives better” (Wheelan 20). It creates competition among different businesses, which results in newer, cheaper, and better products.…

    • 1202 Words
    • 5 Pages
    Good Essays
  • Good Essays

    * Opportunity cost- is the benefit that you might have gained from choosing the next-best alternative…

    • 1181 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Naked Economics

    • 454 Words
    • 2 Pages

    9. Explain what role the government can play in a market economy when dealing with externalities.…

    • 454 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Quiz 15

    • 429 Words
    • 2 Pages

    B. the recognition that government intervention in markets sometimes enhances the economic welfare of the society…

    • 429 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Discussion Question 1

    • 328 Words
    • 2 Pages

    Explain how the market economic system works to answer the fundamental economic questions. Explain how this may differ from a command economic system. Historically, which has worked best and why?…

    • 328 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Naked Economics

    • 597 Words
    • 4 Pages

    After reading the book, please complete the following questions for discussion. Your responses must be typed, and they will be collected on the first day of class.…

    • 597 Words
    • 4 Pages
    Satisfactory Essays
  • Satisfactory Essays

    First Assisgnment

    • 268 Words
    • 1 Page

    2. In the lesson you learned that a market economy is where the prices of services and goods are determined through a free system. Tell what you think an advantage and disadvantage is of this type of economy.…

    • 268 Words
    • 1 Page
    Satisfactory Essays

Related Topics