The Power of Markets

(Time post is late due to internet failure.)

     Three significant ideas that Whelan discusses in the first chapter are why people trade, opportunity costs, and the importance of competition in a free market.  Whelan says that the basic principle behind why people trade is because trading makes us better off.  Let's say that I have something that you want/need, and I have something that you want/need.  If we trade, then we will both become better off, since we now have what we want/need.  A second idea that Whelan talks about is opportunity costs, which are the things that are given up when deciding to do one thing.  For example, Whelan speaks of LeBron James and how he skipped college in order to go into the NBA.  He explains that the oppotunity cost of this decision was that Lebron was never able to go to college.  A third concept that Whelan touched on was how competition in a free market is beneficial.  He explained that without competition, there would be no incentive for people to improve their efficiency in the workplace.  For example, if the government of the USA passed a law saying that all restaurants could only serve the same thing and at the same price, then there would be no incentive for the restaurant owner to improve the dining expericene for his customers.  This is why a free market with competition is so important; because it promotes efficiency, which in turn, uses the worlds scarce resources in the best way possible.