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2.3 End-of-Chapter Material
In Conclusion
Our book is built around economic topics. Examples of these topics include the decisions you make in your everyday life, auctions such as those you see on eBay, whether you can make money on Wall Street, where jobs come from, and health care. As we introduce and discuss these applications, we remain keenly aware of the key themes in microeconomics: individuals responding to incentives, markets as the basis for interactions among firms and households, and the role of government intervention.
Throughout this book, we emphasize the measurement and interpretation of economic data. Understanding how to read charts and tables of economic data is a critical skill for anyone who wants to be a sophisticated consumer of economic and political news.
Mastering microeconomics involves both understanding the tools that microeconomists use and knowing how and when those tools should be applied. In this book, you will learn about these tools by example; you will see them in use as we study different questions in economics. At the same time, you will learn about many topics that should interest you as engaged and aware citizens of the world. We hope that, after reading this book, you will both better understand what it is that economists do and be better informed about the world in which we all live.
There is a considerable amount of core material in microeconomics that we use repeatedly as we tackle different problems. We highlight these core elements in the chapters and also gather them together in the toolkit. You can read any and every chapter in the book without necessarily having to refer to the toolkit, but you may often find it to be a helpful reference.
Exercises
- Think about the last item of clothing you bought for yourself. How much did you spend on it? List three other things that you like and could have bought with (approximately) the same amount of money. Why did you decide to buy the clothing rather than one of the things you just listed?
- How have you spent the previous 24 hours? How much time did you spend sleeping? How much time did you spend working? What else could you have done with your time? Why are you reading this chapter instead of doing something else with your time?
- Think about a game or sport that you enjoy. What rule of that game could be changed? How would this change in the rules affect the way in which the players behave?
- When we discussed individual choice, we talked mainly about the choices of an individual person. However, in economics we often talk about the choice of a household consisting of two or more people. In what ways are the choices of a household different from the choices of an individual? In what ways are they similar?
- Can you think of examples of economic choices that are made by the government?
Economics Detective
- We explained the social problem of air pollution in Mexico as a situation where markets have failed to bring about good outcomes. Instead of writing about pollution, we could have written about other social problems, such as crime, illiteracy, or obesity. Browse the Internet to find another example of a social problem—either from this list or something else that interests you. Write one paragraph that explains the problem and another that discusses if and how the government might solve the problem.