Chapter 1 The first chapter begins with a story about how an advertising strategy by Coca Cola in Europe proves to be a bad idea at the start of 1989 but ends with some impressive results by the end of 1995. There are an array of different ways everyday that make modern economy work. The author begins with the question who feeds Pariss? It’s a starting point to explain how markets are powerful influences in a person’s every day life. The AUthor explains how markets use prices to allocate scarce resources and how markets are self-correcting. Author talks about how the market gears up and aligns incentives such that individuals work for their own self-interest for an improved standard of living. The author explains how the soviet socialist economy failed because the bureaucracy of the government controlled the economy. This chapter says that it is not fair to impose preferences on others. He says that it is bad economics to impose preferences on individuals whose lives are much different from all the rest. The entire chapter rests on the central idea that thinking in terms of incentives and disincentives is the best way to formulate policy. He goes further by saying that one the most important roles of government is regulating these incentives to make sure that they serve its purpose.

Chapter 2 The chapter begins with a story of the rhinoceros, an endangered species, and the reason why as the black rhino becomes endangered, the black market price rises correspondingly making it a vicious cycle. Other examples are used in the book to show that when a material thing brings in profit, that is all right but when they no longer serve their purpose, then they are dispensable. This, the author explains, has nothing to do with compassion but everything to do with maximizing the value of a scarce resource. He maintains that many things in life all boil down to economics. The importance of incentives isemphisized . It leads to the other related topics such as on the domestic front, education, environment, air pollution and even business organizations. Economic incentives usualy lie above other things in the government agenda, and as well as the priorities of the people. I agree with him in that poeple will do a lot to gain money, but when he describes how unused things are dispensible, I think that that is not so simple. When technology (wich is constantly being outdated) becomes obolete, I think that the capitol recourse should be charitably given to other less advanced countries who might still want it. Wheelan simply states that t should be disposed of. Other than that, I agree with him.

Chapter 3 The government provides a crucial role in market economy by dealing with externalities. This means that externalities are very important for all kinds of policy issues. Wheelan makes use of examples we would rarely look such as the creation of a policy in providing baby seats in the airplane as not a good idea in the long run. He uses other examples such as the use of mobile phones and the issue on global warming. As the chapter progresses, he poses questions about each issue. He continues to talk about several externalities that are both positive and negative, showing this with the practice of smoking cigarettes. He delivers the punchline here after enumerating the externalities. This is delivered in his strong statement that smokers generate extra health care costs that must be taken care of by state governments. His refreshing wit drives the point that people’s taxes go to remove part of some smokers lung. His main idea in this chapter is that taxing behavior that generates a negative externality creates a lot of good incentives. I think that inflicting taxes on the American people based on one person’s bad decisions is a very bad idea, regardless of the incentives it creates. He does make a key point when he states this, but I dissagree with him.

Chapter 4 In this chapter, Wheelan shares two lessons about the role of government in the economy. First, he states that the government should not be the only provider of a good or service unless there is a good reason to believe that the private sector will fail in that role. He eplains that the government will be free to take care of things that need to be really handled by the government. There are things that the government should not be doing because when it deals with that, it will be inefficient and not worth it. He cites the example of postal mail. He says that the technology today has changed and things need to be done differently. The second point is that even if the government has an important role to play in the economy, it would not need to be the actual one to do the work. He states that the government playes a role, but as the U.S. is a capitalist society, it is mostly the large and small buisneises that control the economy. I think that even though the goverment creates programs and makes a lot of key decisions, its the poeple they govern that control the economy in the long run. They decide to buy, sell, invest, and voulenteer and that supports the economy. Therefore, I agree completely with the Author.

Chapter 5 This chapter talks with the information, how one acquires it, what people do with it, and how one makes decisions based on that information. This fact is very basic and important, yet one can take this for granted, he says. Wrong judgments and decisions happen when one needs to make a decision based on incomplete fasts or obvious evidence. HE STATES THAT SOME BUSINESSES TRY TO CAPITALIZE OFF OF IT, SUCH AS CASINOS AND LOTERY ORGANIZATIONS. THOUGH THIS IS A GOOD idea for marketing, he puts forward a question; is it moral? He thinks that when there is capitalism, people will try to “get rich” off other peoples’ bad decisions or as he call it, stupidity. I agree that it is a very good way to get money, and even though it may not seem moral, I like it. Any educated person would see that it is not worth the time and money to partake in these activities, but some still do. That being said, it is an excellent way to get money, and is a main idea of capitalism itself.