Wheelan Chapter 1

Wheelan Essay 1

For the first chapter, Wheelan discussed about how trade is important to everyone in one way or another, and how we, as consumers, always seek to maximize utility with what we have in our daily lives, giving one thing up for another option. Producers, on the other hand, seek to satisfy the market demand, or create a demand. One important thing he discussed was how everyone faces tradeoffs, and how we try to maximize utility with the limited resources we have. The market plays a huge part of our everyday trading activities, and this market is created by our needs and wants, and people supplying that demand. In this aspect, almost always, both parties, the consumer and producer, benefits from trade.

In the following chapter, Wheelan discussed about how people respond to incentives, and how incentives affect their decisions. Logically, people choose options that would benefit them the most, or with the least risk or cost, or a combination of both benefits and costs. However, in the chapter, Wheelan did bring up that not all incentives bring about a positive effect. One example would be the Medicare system which does not encourage people to save up for their own retirement, and rely on the government to provide for them at their old age. In this second chapter, the author also discussed about how capitalism and competition has become an incentive for people to continually improve themselves to be ahead of the race, rather than to