Economics is on fundamental level of the study of scarcity. Human desires are unlimited, but resources aren’t and every society tries to figure out how to allocate its resources for maximum benefit. The field of economics attempts in large part, to help understand these resource allocations and decisions. Resources allocated largely according to the forces of supply and demand, and prices serve as incentives to determine how much of a product a company wants to produce and how much people want to buy. Economics can also be looked at as the study of incentives or the study of household business making. Due to such a large variety of information, economist begin to attempt solving a problem by stating “it depends”. These two words are widely used in the field of economics and foremost the most important two words we see in the book “Naked Economics” by Charles Wheelan. These two simple, yet widely used words are portrayed and used greatly through out each chapter by the author giving a simple explanation of how certain scenarios differ and are different from one another based on certain situations.
The first four chapter of the book are and understanding of introducing you to what economics and giving you a brief understanding of how it works, such as the importance of incentives, and the ways economist tackle certain scenarios. The first few chapters introduce many questions, but most importantly ask “Is the Government making our economy better”? This is highly debated throughout and it all boils down to the two words “it depends”. When the government owns a certain part of a part of business, the government has no motive to “do a good job”. For example companies owned and run by the government such as places including the DMV, public health facilities, and hospitals used by people who have insurance given to them by the government, have no incentive to “do a good job” and make the visit quick, painless, and easy.
This proves that government regulation is a bad thing, but there are many ways to avoid this if looked deeper into… Companies could buy out these small time businesses and provide better assistance and quality help. But the government is mainly focused upon two things which are taxation and regulation with trade offs. Chapter four introduces examples of the New Delhi situation, which was when factories and large plants were shut down by the government solely because the pollution got so bad. Many people were extremely angered by this because it left many unemployed and with nothing to do. This caused many problems throughout the society and grew into a large dispute between the people and the government.
A skeletal summary of chapter five is that it introduces the economics of insurance. One question introduced is “how much information is too much information” which insurance agencies and courts take into consideration. If your applying for health insurance and you’re a middle aged man with a history of family health conditions or a history of early death solely due to health issues then filing a claim for life insurance is extremely difficult and sometimes extremely expensive.
On the other hand if you’re a person with no history of bad medical records and have a steady and safe job insurance isn’t something to hard to obtain from a company. This question is greatly used with insurance companies. They will ask basic question and have some questions referring to the things listing above asking for a brief explanation or answer to the following question, not looking out for the person, but looking out for there company so the insurance company can have the highest profit margin possible. The question of “how much information is too much” depends on the person and who you are in the situation.
In last bunch of chapter the question of wealth is brought up and talked about with how economist look at the situation, the question of “how rich am I”. A commonly asked question by many people is “how rich are you” or “how much money do you have”, but this isn’t something that economist look into. They solely look into the GDP per capita which often shows a nations wealth, but is often criticized by many people, even economists. People often don’t realize that a nations GDP per capita can increase while unemployment, and the infant mortality rate increases as well. This is very plausible for an economy. Inflation plays a huge role in wealth for every person and “it depends”.
If home developer earned a gross income of $450,000 per year, you cannot say you are richer than someone in the early 70’s early a gross income of $300,000 per year due to inflation and the economy. The question of your wealth all depends on how you look at the situation and how you define what wealth is to you. If wealth means how much money you have and you don’t consider inflation and certain scenarios then your most wrong. Our economy is every changing and someone earning $300,000 a year in the year of 2009 compared to that of a person in 2001 situations were completely different and may have been easier for that person due to “good” economy.
Throughout the chapters, Wheelan talks about many different scenarios and addresses different questions. In Chapter four Wheelan addresses how the government is helping to promote the growth of the economy. In Chapter ten, he addresses the federal reserve and certain scenarios