The Mystery of the Invisible Hand by Jevons - Book Report/Review Example

The law of marginal utility in its teaching states that as when there is an increased consumption of a product and keeping the consumption of the other products constant, there is a reduction in the marginal utility that a person gets from consuming an additional unit of the product (Jevons, n.d.). There is a different view that is however given to the law of marginal utility by Prof. Spearman from those that are given by the colleagues. According to him, there is a predictable positive correlation that exists among different cognitive abilities of individuals. He thought there is a variation in the population there there are those that get satisfied when they consume additional units of a product. Spearman showed the correlation between different tests that became smaller (Jevons, n.d.). This showed the influence of g on any of the ability to grow less. He thought that the factor differed with difference in classes which on the whole possess the g more abundantly. He proved the arguments that he had against the other people through carrying out 12 diverse tests for normal and mentally defective children.

• The meaning of Patricia’s words

Patricia in mentioning the words, ‘Poppa, for you, work is consumption good’ meant that there was more on discrimination of price that the father considered in buying goods. She meant that there is consideration of determining the satisfaction of wants before there is consumption of goods and services. When the demands of goods increase, the consumers need to determine those goods that will satisfy the wants at a cheaper price. The main point that she was driving is the price discriminations (Jevons, n.d.). Price discrimination is important and is achieved through the bargaining and negotiation of the right price that satisfy the value of the good or the service that is provided.

Consumption good in the phrase considered the demand and the price that the consumers want to get the goods. The consumers are willing to negotiate for the lowest prices to attain a good as compared to the sellers who need the highest prices for their goods.

• Demand and supply of economists

The phrase, ‘It’s striking how many economists end up as deans of business schools’ is an mater of supply and not a matter of demand. The factors; supply and demand are considered fundamental concept of the economy and the backbone of the market. The increased number of economists ending up being deans is considered supply since the concept of supply since it shows how much the market can offer. The quantity that is supplied is the number of a good or a service that the producers are willing to give to the market at a given price (Jevons, n.d.). When there is increased number of economists being deans, this implies that the economists are willing to give their services as being deans at the price options given to them.

There is relationship between the price of the services that they give and the amount that the economists are willing to undertake as being deans. The statement also can be linked to the law of supply. The relationship shows the amount that will be given at some prices. The economists may be willing to become deans due to increased profits that they obtain when they are dean as compared to when they are just economists.

• Compton’s argument

Compton argues that when payment is made for the stadium, there is no taxation of local income or property. The tax that is given was on hotel rooms hence there is no cost that the citizens of San Antonio paid. The sentence was not correct since paying for the rooms were part of the costs that are meant to improve the stadium (Jevons, n.d.). The stadium costs are together with those that are incurred when the citizens spend on the rooms belonging to the management of the stadiums.

The tax that was from the hotels was the ones used in building and improving the stadium so the citizens contributed to the stadium indirectly. In the arguments that are made by Compton, he does not consider the direct costs the citizens incurred in using the rooms.

• All houses being for sale despite the listing

`There are different costs that are not listed by the landlords. The landlords before setting the prices for the houses, there are different factors that they consider such as the labour and the power consumptions. These are costs that cannot be directly being attributed to the specific object or services that are done to the houses. The tenants in their payments do pay for the goods indirectly without the knowledge and the services they get. There are a wide range of outputs that tenants pay when they get into the houses that are not specific. The costs are made constant for a wide range out output and they are fixed. Tenants have no option but to indirectly incur the costs.

• Arbitrage and discrimination

Arbitrage has been considered the economic death of discrimination. Through the application of arbitrage, there is reduced discrimination in price since there is the awareness of the price that a good should be allocated. Arbitrage is the continuous purchase and sale of assets with the aim of attaining profit from difference in the market prices. When there is arbitration, the trader is aware of all the market prices as he exploits the difference in the prices in similar or different forms. The difference shows that the trader is not discriminated on the prices.

Arbitrage have existed due to inefficiency in the markets and it is with the aim of providing a mechanism that ensures there is no deviation in the prices from fair value in a given time period.

• The option of artists selling with just a gallery

The main advantage that is associated with selling in one gallery is that the sales-person may have the incentive of hard work on behalf of the artist. The work of the artists differs and the demand of the works also may differ. When they are sold in one gallery, the artist has the ability of selling even the less demanded at a good price since they are together with the highly demanded ones (Jevons, n.d.). In a gallery of an artist, the price is kept constant for all and the buyers will not see discrimination in the buying since they will be able to satisfy their wants at the right price despite the fact that there are other works in the gallery that they may dislike.

The sale as a gallery also gives the artist a chance to claim a good price for the works. The artist can consider the number of works in the gallery and get the right prices as compared to when a work was independently sold. The challenge that may be experienced in selling an independent work is reduced when they are sold in a gallery.

• The death of bell curve and solving crime

The bell curve was used as a powerful predictor of wide range of the social problems in the society including crime. The consideration has made the possibility of solving crime. The analysts have proved that through the use of IQ is important in reduction of crime. The improvement and the effect helped Spearman in solving the theft and the crime mysteries that he had since he was able to predict the occurrences through consideration of IQs.

Part B

Why Americans pay more on drugs that any other country in the whole world

The united states have been considered the country that pays more on drugs that any other country. The country leaves pricing to competition that is in the market. The country also has the government directly or indirectly controlling the costs of medicine. The control and the prices that are left to the market make the country the most profitable market for all the pharmaceutical companies. The researchers of drugs and the manufactures consider the situation that returns are needed reward the high-risk research in the country and the economic value that is provided is reflected by the prices. The reason for the high expenditure on drugs is linked to the country’s survival rates for diseases such as cancer and the availability access schemes for citizens that are poor.

The prices of drugs have also been seen to be in an increase due to the confidential rebates, strict guarding on trade secrets and multiple middlemen that handle the medicine before they reach the consumers. The reason behind the high prices of medicine is also rooted in the practical and philosophical differences in the way the health system providers benefit from the drug industries. The other developed countries run hard bargain with the drug companies and in the process, they set price caps, demand the proof of the value of new drugs that are in the market comparing them with the ones already in the market and at times refuse to cover the medicines that are doubted to be unworthy the cost. This is contrasted to the pharmaceutical industry in the United States that does not have the bargaining power for their medicine.

The systems by the other governments being the only large buyers of the drugs give them the negotiation and bargaining power. The drug market in the United States by contrast is highly fragmented with those that paying the bills for the medicine ranging from the insurance companies to the employers to state and federal government. Medicare is the only large buyer of the United States drugs and also the ones who are responsible for the negotiation for the country. The arrangements hence imply that the operations of Medicare are forfeiting the buying power leaving the others such as the doctors’ offices to bargaining. The offices have little effect on the prices as it would be with strong bargaining power of one body such as Medicare.

The united states have a competitive biopharmaceutical market that works to control the costs of development and at the same new cures and treatments. Lack of the right bodies to deal with the prices in the market place in controlling the prices has not been established. There are no organizations or bodies that have bargained and negotiated for the constantly increasing prices of drugs. The reduced prices of drugs in other nations are due to the reduction by the government for the poor people. The united states being a wealthy nation have not reduced their prices as they think all can afford the drugs.

Reference

Jevons, M. The mystery of the invisible hand.