Chapter 6: Supply, Demand, and Government Policies

                Chapter 6 was a relatively easy chapter to read and understand the concept of it. The main purpose and terms used are the same ones from the previous two chapters and how they tie in when the government steps in to promote a sense of fairness in price. The chapter also discussed the affects that taxes can cause on the buyers and sellers.
               One of the majorly interesting things that I found in the chapter was the connection between taxes and the rise of unemployment. I know that we had mentioned this situation in class before, but the book did a really good job explaining it and making sense out of it. I was so intrigued by the situation that I looked up the current minimum wage in Chicago, which is $10. This fact is interesting since I also looked up the minimum wage in Illinois and that comes out at $8.25. I found it quite peculiar to have different wages if we are in the same location.
               In regards to questions, the only part I need more clarification on is how the elasticity affects the burden on either the seller or the buyer. Besides that, the graphs in the text were limited and clear to understand. It was also helpful that this chapter included more cases to get a real-world example. Overall I would give Chapter 6 a rating of 1.5.

Chapter 5: Elasticity and Its Application

 Chapter 5 is all about elasticity and how you apply to supply and demand respectively. In order to go in depth about how you use elasticity with demand, elasticity is a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants. When talking about demand, there are some general rules that apply, such as the availability of close substitutes, necessities v. luxuries, definition of the market, and the time horizon. Each one of these rules has different elasticities since they are all different levels of elastic price. The elasticity of demand also includes important formulas such as the midpoint method, total revenue, and income and cross-price elasticity. The general ideas of these applications can also be used for the elasticity of supply. Throughout the chapter, there were many graphs included that described and showed each of the situations and how it affected the curve. Overall, I would give the chapter a rating of 2 since it did thoroughly explain the applications of the formulas but it didn’t help to understand when faced to solve questions. I feel that it tried to mush all of the situations and terms into one chapter and I didn’t really understand it. Yet, they did do a good job of really trying to demonstrate the difference between supply and demand in regards of elasticity. 

Article Review #1: Why The Keynesian Chorus Is Cackling Like Chicken Little

I must admit, this article was definitely challenging to read but I managed to get the overall idea of the author’s main point. It seems pretty obvious that Mr. Stockman is against the Keynesian economic view and the way the federal government is attacking the issue. Keynesian economics is “An economic theory of total spending in the economy and its effects on output and inflation,” (Investopedia). According to the recent statistics of federal government spending, the government has been pumping free money into the walls of Wall Street with no success. I do recall hearing about a possible raise in interest rates due to Wall Street’s closing price falling, and this article seems to say the opposite. According to the data presented by Mr. Stockman, the input of money into the trade has had no impact on the housing rates or inflation prices, which was supposed to have had some change due to the government’s actions, or tightening. Tightening was a term that came up all the time in the article and I wasn’t quite sure what his stand was regarding the effects it has had. What exactly is tightening and has it been present before? I do recall Mr. Stockman mentioning the creation of the financial bubble in the past but is it likely to burst soon?  In regards to the graphs available in the article, I found them to be a bit hard to understand and an overall explanation would definitely be helpful. 

Chapter 4: The Market Forces of Supply and Demand

 Chapter 4 is discussing the market processes of supply and demand in a perfectly competitive product market. By having a perfectly competitive market, there is no chance of monopolies and the sellers must become the price takers. For the sellers to understand or predict what price to sell their product, for example ice cream as used in the chapter, is affected by the quantity demanded and supplied. For demand, it is also important to understand the relationship prices of related goods have on the main product, ice cream. These related goods include substitutes and complements, or frozen yogurt and hot fudge. All of the topics above are similar for supply and how these variables all have a direct correlation with the price and the quantity supplied. In addition, two major tools to help understand these concepts are the supply/demand schedule and curve graphs. But what happens if the supply and demand of the product is exactly the same? If these conditions happen to exist, we have reached the term of equilibrium. Reaching equilibrium is sometimes considered the market-clearing price since everyone involved in the market is satisfied with the results. Yet, a change in equilibrium can result in a surplus (quantity supplied is too much) or a shortage (quantity demanded is greater than what is being supplied). In conclusion, all of these terms and concepts all relate to the principle of how markets are a good way to organize economic activity.

Chapter 3: Interdependence and the Gains from Trade

Chapter three is mostly about comparative advantage and how it relates to the trade market. The overall concept was to stress the importance of how good trade is and the benefits of it at a national and international level. Trading and specializing in what you do best is important to raise the benefits and prices of the good. By doing so, the size of the pie gets bigger, which is the goal of the economy. The rate I would give this chapter is a 1, being relatively easy. The only question I have is why could trade by like war? An idea similar to this was mentioned at the end of the chapter and it left me uncertain.