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The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne
Edition 13ISBN: 9780132992695The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne
Edition 13ISBN: 9780132992695 Exercise 1
How much do people have to know about one another in order to cooperate effectively? Contrast the situation of two family members who are planning to take a vacation together with the situation of motorists who are simultaneously using intersecting streets. How are "collisions" avoided in each case? What do you know about the interests, the personality, or the character of the people whose cooperation supplied your breakfast this morning?
Explanation
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The theory of economics is important for explaining the cooperation in different cases and the reasons for their collision. Every individual desires to reach the targets and thus decides actions according to the expected net advantage.
For effective cooperation, the individuals are required to observe the actions of others and then interact with them. It is required to know the ways to communicate their actions and plans to each other. Also, it is important to be able to read and understand the signals that are emerging because of others' actions for planning their own activities. Awareness is necessary regarding the rules and whether other participants are following them or not. Thus, there are certain customs and practices according to which the individuals pursue and manage plans and tasks.
There is a given situation that the two family members are planning to take a vacation together. Here, it is required that they have to take a decision regarding the destination to which both agree. For this, interaction between the two should take place as it is possible that their interests vary. So, in order to avoid any collision between the two, they need to coordination by interacting with each other.
Another situation is of the motorists who are using the intersecting streets simultaneously. This is being done by economizing their respective actions. By coordinating with other motorists, each of them is doing whatever seems correct. Chances of collisions and accidents are there but quite minimal. Otherwise there is always perfect coordination between all those plying on the same streets at the same time.
Though a particular method is not being followed by any driver, still the coordination is there because of unintended consequences. In the situation if the traffic lights are not working, the turn signals or break lights still send signals by each motorist to the fellow drivers. These simple interactions lead to effective coordination and avoid collision.
For supplying breakfast to an individual one morning, there are a number of people involved including farmers, bakers, supermarkets checkers, truck drivers and many more. The breakfast of an individual is ensured by coordination between all these.
Thus, the economic theory states that the choices or plans of every individual affects the opportunities available to others.
For effective cooperation, the individuals are required to observe the actions of others and then interact with them. It is required to know the ways to communicate their actions and plans to each other. Also, it is important to be able to read and understand the signals that are emerging because of others' actions for planning their own activities. Awareness is necessary regarding the rules and whether other participants are following them or not. Thus, there are certain customs and practices according to which the individuals pursue and manage plans and tasks.
There is a given situation that the two family members are planning to take a vacation together. Here, it is required that they have to take a decision regarding the destination to which both agree. For this, interaction between the two should take place as it is possible that their interests vary. So, in order to avoid any collision between the two, they need to coordination by interacting with each other.
Another situation is of the motorists who are using the intersecting streets simultaneously. This is being done by economizing their respective actions. By coordinating with other motorists, each of them is doing whatever seems correct. Chances of collisions and accidents are there but quite minimal. Otherwise there is always perfect coordination between all those plying on the same streets at the same time.
Though a particular method is not being followed by any driver, still the coordination is there because of unintended consequences. In the situation if the traffic lights are not working, the turn signals or break lights still send signals by each motorist to the fellow drivers. These simple interactions lead to effective coordination and avoid collision.
For supplying breakfast to an individual one morning, there are a number of people involved including farmers, bakers, supermarkets checkers, truck drivers and many more. The breakfast of an individual is ensured by coordination between all these.
Thus, the economic theory states that the choices or plans of every individual affects the opportunities available to others.
The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne
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