Analysis of chapters 1-8, 12-13, and the epilogue of the book Naked Economics, by Charles Wheelan, focusing on (but not solely just answering) the questions identified below for each chapter.

You should follow these parameters:

Each chapter analysis should begin on a new page.

Each chapter analysis should have its own title.

Use the questions as a guide to form a well-constructed analysis of each chapter. You will

need to give your personal thoughts as well.

Avoid using direct quotes from the text; interpret the concept in yourwords.

You may use in-text citations (using only a page number) to make references to specific

information from the book. Your objective is to be brief but also descriptive!

Chapter 1: The Power of Markets

o What are the two basic assumptions economists make about individuals and firms?

o What example does the author give to back up his statement that "maximizing utility is

not synonymous with acting selfishly"?

o What is the role and significance of prices in a market economy?

o What are the advantages and disadvantages of a market economy?

Chapter 2: Incentives Matter

o Explain how each of the following relates to efficient outcomes in a market economy:

Adverse selection

Perverse incentives

Principal-agent problem Prisoner's dilemma

o How does the author back up his assertion that government benefits create perverse incentives?

Chapter 3: Government and the Economy

o Explain externality in yourwords

o What roles do governments play in a market economy?

Chapter 4: Government and the Economy II

o What are the reasons why the government should take a limited role in a market

economy?

Chapter 5: Economics of Information

o How does the author use the example of the HOPE scholarships to explain the problem

of asymmetry of information?

o What does the author mean by "perfect information"?

Chapter 6: Productivity and Human Capital

o Do you agree that Bill Gates should be richer than you? Explain.

o What is "income inequality"?

o Why do economists argue that we should not care about "income inequality"?

Chapter 7: Financial Markets

o How do get rich quick schemes violate the basic principals of economics? o Do you agree with the author's rules for investment advice? Explain.

Chapter 8: The Power of Organized Interests

o Why have Mohair farmers earned a subsidy from the federal government? o What does the author mean by "in politics, the tail can wag the dog"?

o What is the economic impact of the statement in the question above?

Chapter 12: Trade and Globalization

o What is the "good news about Asian sweatshops"?

o How can free trade and the concept of specialization make all nations better off?

Chapter 13: Development Economics

o Based on your reading or experience, what do you believe are the two biggest

obstacles preventing poor countries from becoming rich?

Epilogue: Life in 2050

o What are three economic questions you have about life in 2050?