Civics and Economics Student Guide: Economics Chapters Two and Three

Themes: Scarcity Power, Efficiency, and Markets

Date Assignment Due

Monday, April 9 Due: Read pages 33-41, stop at “The third way…” answer
questions 1-3

Tuesday, April 10 Due: Read pages 41-47, questions 4-7

Wednesday, April 11 Due: Read pages 48-62, answer questions 8-10

Thursday, April 12 Due: Read pages 63-77, answer questions 11-15

Friday, April 13 Due: Quiz Economics Unit Two

Reading Questions: Chapters Two and Three

1. What was Costa coffee’s strategy to utilize its scarcity power?

2. What was the strategy utilized by the Starbucks on P Street?

3. What are two strategies for finding the price customers are willing to pay? How effective
is each?

4. What is the third strategy, as explained by Harford?

5. When Harford went “undercover,” what did he find in London’s supermarkets?

6. What is “price-gouging the natural way?”

7. What is Harford’s analysis of Whole Foods?

8. Why do businesses “mix it up” with sale pricing?

9. Read the “Reality Checks” on pages 50-57. Explain (a) why Harford doesn’t think big
companies are all-powerful and (b) what great leaks exist in marketing schemes.

10. Read pages 58-62. Summarize when price-targeting is a good and bad thing. It may be
helpful to make a two-column chart for this section.
11. How do prices “tell the truth?”

12. Read pages 66-70 and (a) explain how competition affects price and (b) the results of
interconnected competitive markets.

13. List several advantages and disadvantages of life without markets.

14. Read pages 72-72 and explain the gist of Harford’s two sections on the “signaling
function of prices” and “efficiency versus fairness.” Bullet points are fine.

15. After reading pages 75-77, answer this question: can we enlist markets to help with
fairness?