Book Review: Common Sense Economics

Topics: Economics, Cost, Transaction cost Pages: 4 (1146 words) Published: August 14, 2013
Amanda Oha
PPOG 502
Dr. Stewart
Book Review: Common Sense Economics
The book, Common Sense Economics written by James D. Gwartney, Ricahrd L.Stroup, Dwight R. Lee, and Tawni Ferrarini, gives a simple insight for reader into the inner workings economics in a common sense terms. The main point of the book is that to have economic success comes from low interference from the government, the motivation of individuals, and competitive markets.

In the beginning of the book, the authors of the book started to breakdown this message of economics by explaining to the readers the twelve key elements of economics. 1. Incentives matters
2. There is no such thing as free lunch
3. Decisions are made at the margin
4. Trade promotes economic progress
5. Transaction costs are an obstacle
6. Prices bring the choices of buyers and sellers into balance 7. Profits direct businesses towards activities that increase wealth 8. People earn income by helping others

9. Production of goods and services people value not just jobs, provide the source of high living standards 10. Economic progress comes primarily through trade, investment, better ways of doing things, and sound economic institutions. 11. The “invisible hand” of market prices directs buyers and seller toward activities that promotes the general welfare. 12. Too often the long term consequences, or the secondary effects, of an action are ignored. The authors felt that these key concepts were important for the readers to understand the inner workings of the economic success. These key concepts are needed from readers to understand the true meaning of values, cost, prices, and standard of living. In the authors’ minds, they felt these key concepts were needed to help explain important concepts that they would explain later on in the reading.

The first concept, Incentives Matter, is the first concept that that the authors talked about in the book....
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