Chapter 2 describes a centrally planned economy and a market economy where people are free to make their own choices over what they buy and what they sell. A market economy guides people towards efficient decisions -- if the assumptions are mostly correct about what people are really like (greedy, selfish, never fully satisfied, immediately able to make correct decisions about what is best for themselves among all alternatives).

Rice Krispies are distributed in the market. The amount of Rice Krispies I eat is my own business, and nobody else cares how often or how seldom I eat them. I can buy as many boxes of Rice Krispies as I want, and nobody will try to stop me. I am the best judge of how often I should buy them and how much I should eat.

When these assumptions are NOT CORRECT, we make exceptions to using a market economy.

(1) Even if I want to buy narcotics -- the government won't let me. (2) Maybe that's because we think that users of narcotics become addicted to them, and therefore lose their ability to make good decisions about what is best for themselves.

(1) Even if I want to keep a lion in my house, the government won't allow it. (2) There's just too much danger that my lion might escape and harm other people.

Can you think of some OTHER example where we don't use markets to allow people to choose whatever they want -- and then try to figure out what assumptions justify that exception? Remember -- you need to do 2 things:

(1) Identify an example where we DON'T let people choose whatever they want;

(2) Explain why allowing people to choose for themselves how much they want to buy is not a good idea.