The Economics Book

THE AGE OF REASON 59 It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from ...

60 FREE MARKET ECONOMICS Localized markets such as this one in Kerala, India, exhibit all the hallmarks of Smith’s free market a ...

THE AGE OF REASON 61 Human society, when we contemplate it in a certain abstract and philosophical light, appears like a great, ...

62 F renchman Anne-Robert- Jacques Turgot (p.65) was one of a small group of thinkers known as the physiocrats, who believed tha ...

63 I n 1769, Anne-Robert-Jacques Turgot (p.65) noted that despite its necessity, water is not seen as a precious thing in a well ...

64 MAKE TAXES FAIR AND EFFICIENT THE TAX BURDEN W ho bears the burden of tax? The key question of “tax incidence” intrigued the ...

65 See also: The circular flow of the economy 40–45 ■ Efficiency and fairness 130–31 ■ External costs 137 ■ The theory of the se ...

66 DIVIDE UP PIN PRODUCTION, AND YOU GET MORE PINS THE DIVISION OF LABOR W henever people work in a group, they invariably start ...

67 In a busy stockroom, labor may be divided between porters, inventory clerks, a manager, accountants, distribution specialists ...

68 POPULATION GROWTH KEEPS US POOR DEMOGRAPHICS AND ECONOMICS IN CONTEXT FOCUS Growth and development KEY THINKER Thomas Malthus ...

69 See also: Agriculture in the economy 39 ■ Diminishing returns 62 ■ The emergence of modern economies 178–79 ■ Economic growth ...

70 MEETINGS OF MERCHANTS END IN CONSPIRACIES TO RAISE PRICES CARTELS AND COLLUSION C ompetition is key to the efficient working ...

71 See also: Effects of limited competition 90–91 ■ Monopolies 92–97 ■ The competitive market 126–29 ■ Markets and social outcom ...

72 which was founded in 1960 to coordinate oil prices among member countries. Challenges for cartels However, there are problems ...

73 The difficulty in forming and maintaining cartels means that these “conspiracies” are less common than Adam Smith might have ...

74 SUPPLY CREATES ITS OWN DEMAND GLUTS IN MARKETS I n 1776, when Adam Smith wrote The Wealth of Nations (pp.54–61), he noted tha ...

75 Say believed that supply and demand operate through a type of barter. We swap the money we earn for goods we want. In this im ...

76 BORROW NOW, TAX LATER BORROWING AND DEBT S hould government spending be financed by borrowing or taxation? This question was ...

77 The Greek state was forced to borrow large sums in 2011 to avoid bankruptcy. The civil unrest that followed made it clear tha ...

78 THE ECONOMY IS A YO-YO BOOM AND BUST B usiness cycles are the shift between strong economic growth, described as a boom or ex ...