Chapter 5

Chapter five introduced and focused on the idea of elasticity, in which it measures responsiveness to changes in the market. Along with supply and demand, it is very important in analyzing changes in the market to see what changes will occur in the good and how it'll be affected. Most common normal goods are elastic, in that something like a change in price would cause the market to respond based on elasticity. Luxuries are an extreme, where they are very elastic due to not being needed by most (although outliers could say it's needed for them), while doctors' visits are inelastic, in that even if it increases in price, not much change would occur. Elasticity is very important, in that supply and demand go with it to be able to understand how a market reacts. It expands on the basic idea of just simple factors affecting how much of a good is sold and demanded, and shows how those factors would actually affect the outcome of the changes with more factors. Some new things are perfectly inelastic supply and demand, with completely horizontal and vertical lines. An interesting example given is wheat, and what would happen if technology helped produce more. Due to the increase in supply and inelastic demand for wheat, the equilibrium point shifts to a lower price with slightly more quantity, and will overall have a negative effect on farmers due to loss of revenue. Elasticity can show how advances can affect people in the market negatively, even if it looks like it'll be more useful.

Article Review 1

The main argument introduced and argued throughout the article focused on, mainly, of how the interest rates that we have are currently creating an economic bubble that will likely pop in the near future and going against the idea that the government is tightening too much money, but instead actually needs to have tightened the amount of money it had a lot sooner. I wasn't too sure at first, but understanding now, the current negative interest rate of -1.52 means the government is basically giving away money, all while trusting that businesses/consumers will use that money for spending and good business decisions. Overall though, there is no actual monetary stimulus to make up for the fact that it lost a lot more money than in past years because of it, with business investment actually being lower in 2015 than 2000, even though the federal government issued out incredibly more money than before. The author was very aggressive in his stance, constantly getting angry at the Goldman index, in which it had data that "instructs" the central planners to not fix the distortions in the market, constantly causing the bubble to grow bigger. The problem, though, is that it's been constantly done so many times over the past 25 years, "fixing" the current problem with a short time solution. And, according to the author, due to the "nonsense" that Keynesian Economics supporters' impacts have had on the federal government's spending, the economy's collapse will be brutal and incredibly destructive.

Chapter 4

Chapter 4 focuses heavily on three subjects: Supply, demand, and how they affect the economy together. Both supply and demand have their own curves that each depend on different factors, but ultimately combine and meet to create the equilibrium point, where all the factors involved lead to both supply and demand being the same. The equilibrium point. while ideal, needs to actually be reached first. At any point in time, both supply and demand curves may shift through their own means, but the goal is to always try to shift back in a way to be as close as possible to the equilibrium point. Having more or less of a product than what the market demands causes surplus and shortages, creating problems for sellers who then try to find ways by highering or lowering prices, or other means for what the issue may be. Prices can affect both the supply and demand curve, as sellers may see an increase in price as more profitable, therefore getting more of the good in stock, while customers on the other hand may believe that such a high price means they may have to buy either substitutes if available, or inferior goods that are cheap and work well enough to not have to purchase the original good. Supply and demand is an intricate system that showcases how buyers and sellers will react to change in goods, and how resources will be used and allocated to cater to the ever changing market of a variety of goods, with all businesses, small and large, affected by how everyone responds to the ever changing market.

Chapter 3

The focus on this chapter centered on trading and the positive effects it can have to parties involved, explaining the ways that 2 different parties can be affected by it. The main example, the farmer and rancher, showed that even though the rancher was better than the farmer at producing both meat and potatoes than the farmer, they would both benefit from trading with each other rather than limiting themselves and trying to get both products on their own. Although very simple, this example showed how specializing in something that you're good at doing and trading is beneficial overall. There was doubt in the farmer as to how it can help him better, but charts/graphs helped show how trading can help him have more than what he can currently make with his current workload input. And, although one person can have absolute advantage than another in everything, the comparative advantages between them is different unless the opportunity cost between the two parties is the same. Absolute means one can be better overall in output done for what the two of them can make, even so though comparative means that one person can give up less than the other to make the same good. The differences between the two is showed more in later examples. In a scenario with Tiger Woods and his neighbor, participating in a commercial and hiring the neighbor to mow the lawn is better for him overall instead of wasting the time needed to do the commercial by mowing the lawn.