Thinking about Economics

Thinking about Economics Student’s Name Institution Thinking about Economics Part A The point the three materials try to make is that one entity cannot successfully control all the processes that make up a system. That a market economy can self-correct itself for Paris to feed itself efficiently, bread to be sold at the right price, and parts of a toaster to be assembled at reasonable costs. The three materials offer valuable lessons about the functionality of a free economy. While Thwaites (2010) does not relate his presentation to the market economy, the project he undertook of making a toaster from scratch offers important lessons about the significance of the division of labor and specialization. Thwaites (2010) went through a great deal of trouble trying to gather the over 100 materials required to make a toaster. Right from mining iron to shaping the plastics, it took a lot of resources and time to come up with something which is not even comparable to the toasters in the market. The biggest economic lesson from his experiment is that a successful production of a toaster worth selling in the market requires a high degree of specialization and division of labor. That one person cannot carry out all the processes required to make a toaster and still be able to sell it profitably. The same lesson is seen in Adam Smith’s demonstration of the significance of the division of labor. In a workshop where 10 workers specialized in different processes of making a pin, 48,000 pins would be made in a day, far more than they would make if each worked alone. Similarly, for Paris to be fed efficiently, the conditions of the market allow for different suppliers to sell supplies as they try to make themselves as well-off as possible. Therefore, from the three materials, one can understand the important roles specialization and division of labor play in a market economy. Part B The m...