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Naked Economics Chapter 4 Summary

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Chapter 4 is focusing on demand, demand is a microeconomic concept. Microeconomics is the part of economic theory that deals with behavior and decision making by individual units, for example, people and firms. The definition for demand is the desire, ability, and willingness to buy a product that can compete with others who have similar demands. Demand is essential to the process for market economy that deals with the three basic questions: What, How, and For Whom to produce. The concept of demand consist of two variables- the price and quantity of a specific product at a given point in time. To see how an economists would analyze demand, you would use a demand schedule. A demand schedule shows the various quantities demanded of a particular …show more content…

When the price of a product drops consumers pay less and the consumers are left with extra income. If the price of a product went up the consumer would probably be left with little to no income left over. This can be used as an example to describe the income effect. The income effect is the overall change in quantity demand for that product because of a change in price that alters consumers’ real income. The substitution effect is the change quantity demand because of the change in the relative price of the product. Whenever a price change causes a change in quantity demand, the change appears in the graph alongside the demand curve. If other factors change but the price of a product remains untouched this will cause the consumers to buy different amounts of the product at the same price. This scenario is known as change in demand, a change in demand happens when the entire demand curve shifts either to the right( which shows an increase in demand) or to the left(which shows a decrease in demand). If there is a change in demand, a whole new demand curve would be the result of this, but if a change in quantity demand occurred a movement along the original demand curve would be the

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Incentives, as read about in the second chapter of Wheelan’s Naked Economics, take on many different faces; good or bad, and all of them are selfish. Incentives are entirely fueled by self-interest and opportunity cost. In order to insure his audience fully grasped the concept of incentives, Wheelan illustrates a variety of example, leaving positive and negative effects on our modern society. Incentives, opportunity costs and self-interest are connected in a way that make the ideas more concrete, and we see that incentives own society. A lot of vital information can be deduced from looking at the incentives of our society.

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When there is an increase in demand and supply, prices are lower which is beneficial to consumers. Comparative advantage affects trading because at equilibrium, no group can be better off without making the other group worse off. Overall, Cocktail Party Economics is a great book that makes the key concepts in the first five chapters easy to relate to supply, demand, and equilibrium in chapters six, seven, and

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Chapter seven focuses on measuring domestic output and national income. It informs on how GDP is measured, on how to figure out Real GDP and nominal GDP. It also discusses what is considered GDP, and what is not. GDP stand for gross domestic output, which its exact definition according to the textbook, is an output as the dollar value of all final goods produced within the borders of a country, usually in a year. This is a monetary measure.

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In chapter three the book address what a state is. Readers will learn about the many factors that contribute to how a state functions. Throughout chapter 3 the reader will learn about the modern state and how state capacity determines how states will achieve political goals. This is an important part of comparative politics that the reader must understand before reading further into the book. Without a strong foundation as to what a state is and how it functions a reader will not be able to understand modern politics.

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In chapter 8, the core economic principle that displays itself often is The Consequences of Choices Lie in the Future. This principle presents the idea that what we are doing in today’s economy will have an impact on the future. Whether it is decisions on cutting benefits or raising taxes, any of these could cripple our futures economy. In the chapter, it discusses the fiscal policy and how it saved America’s economy after the depression. By monitoring the nation 's spending budget and taxes, so another depression or a recession does not occur.

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The chapter 6 of our study book addresses the interest rates and yield curves. It started by giving an overview of the interest rates fluctuation in the US economy over the last decades and how the demand for bonds increased with reduced interest rates (demand curve shifting right) when the business conditions were favorable. This situation made the bond prices go high while the yields go lower, the opposite is true as well when the business climate was unfavorable. The risk structure part of the chapter explained the difference between corporate and treasury bonds in terms of risk, indicating that the US government never defaulted on its bonds while corporations are more likely to default due to their relying on business conditions.

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I am amused by the answers provided here. The most amazing thing is no one have any idea about how economics work. I am not an economics expert, but this is the probably first thing you'll be taught in economics after demand/supply curve. Currency prices works like an index of prosperity in the respective nation.

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This is evident in the simple supply and demand graph; as price goes up, supply will increase as more suppliers will be willing to supply at a high price, but the demand will decrease due to the high price, causing a surplus of products. A real life example would be the milk industry in the United States, where governments put a price floor above the equilibrium price to support the suppliers, causing a great surplus of dairy products. Another example is the San Francisco Earthquake in 1987, after the disaster the demand for bottled water increased drastically, causing a right shift of the demand curve in the market of water, however the supply of bottled water also decreased due to damaged pipes, therefore the price of bottled water increased. Many other suppliers may sell bottled water at that time with a very high price, this is called price gouging. High prices often does two things that benefits the economy, one is that it encourages the consumer to conserve the product and not waste it, the other is that it encourages suppliers to supply when a product is

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Module 1 Study Guide Chapter 1 1. What is the difference between a. and a. What is the discipline of economics study? In your answer, use at least four of the following five terms: economics, scarcity, division of labor, specialization, economies of scale. The study of how societies distribute their finite resources to satisfy their needs and desires in the face of scarcity is known as economics. An essential idea in economics, scarcity signifies that resources are restricted compared to the limitless demands and requirements of people and society.

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As I have explored the complex field of economics, I have read through several chapters that have shed light on the fundamental ideas guiding the distribution of resources in our society and the dynamics of markets. Every idea, from productivity to scarcity, has helped me gain a better grasp of how economic forces impact our reality. Because resources in society are limited, not all the goods and services that people would like to have can be produced. This is known as scarcity. I learned about the idea of scarcity in Chapter 1, which highlighted how society's limited resources I have read through several chapters which have clarified the basic concepts governing the behavior of markets & the allocation of resources in our cultural environment

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Economics is a science that deals with various problems which can be summarized in four questions:  What products are produced in a society and in what quantities?  How these products are produced?  How are these products distributed to the members of society?  How to increase the amount of products, namely how to develop the economy of a society?

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CHAPTER 2 READING OUTLINE 1. Highlight the main features of: 1.1. a command economy: The command economy is known a socialism or communism, where the government is who control and ownership all the resources. In this class of economy all the decision is made by a central planning board who means they decide what is produce and how much is charge for what is produce.

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1.For each of the three fundamental economic questions, explain why it is important for society to answer that question.   What goods and services are to be produced? Every society must be able to decide to produce to meet the needs of each individual. If much of a product occurs, less can produce another.

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The day of August 10 of 1680, a rebellion that made history took place in what is now known as the four corners of the United States of America. This uprising is known as the Pueblo Revolt. On this day the Pueblo Indians, composed of several tribes like the Hopi, Zuni, Jemez and Taos, upraised against the European colonizers; and without any special training, forced the Spaniards out of their lands obtaining the victory over the Spanish. The Puebloans tolerated the Spanish who invaded their land and oppressed their people for almost more than eight decades. But what oppressions, distresses and circumstances lead to this revolt?

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DEMAND CURVE Demand is defined as the different quantities people are willing to buy at different prices. As the price of good increases the demand decreases and vice versa. The law of demand states shows an inverse relationship between price and quantity demanded. The demand curve shows the relationship between the quantity of a good a consumer is willing to buy and the price of the good. The equation for that shows the relationship between the quantity demanded and price is as given below: QD =

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