“The problem with Asian sweatshops is that there are not enough of them.”--Charles Wheelan, Naked Economics, p. 20. How is Wheelan’s statement illustrative of the concept that every market transaction makes all parties better off?
Answer to relevant QuestionsWhat incentives are created by each of the following allocation mechanisms? Market, first come first served, government. Give an example of an externality between firms, between customers and firm, and between suppliers and firm? Is it necessary to have democracy to have a “free enterprise economy”? Can a free enterprise economy and totalitarianism coexist?In Chapter 1 it was noted that economics examines issues “at the margin.” Explain how this would apply to the decision to make or buy. Would it be more efficient to enable employees to vote on decisions with majority rule or to assign the CEO full responsibility for decisions? Explain.
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