Chapter 1: What is Economics?
The Economics of the Super Bowl
Thinking Critically Questions 1. Why is the Super Bowl such an attraction for advertisers? Advertisers are attracted to the Super Bowl because of the amount of people that watch the game. The big budget commercials are also part of the experience. "According to a survey recently conducted by the Retail Advertising & Marketing Assn., 36.3 percent of consumers will tune in primarily to watch the commercials." 2. What makes this year’s Super Bowl more attractive? The article addresses the fact that the New England Patriots were looking to make history by becoming the first team to go 19-0. Also, there will be more money spent on advertising ads than ever before. 3. What other businesses would you expect to see benefit from the Super Bowl? Businesses that may benefit from the Super Bowl are hotels, restaurants, and local tourist attractions. Also, construction companies due to the improvements that will be made to the stadium and surrounding areas in preparation of the game. Opportunity Cost The question advertisers must ask themselves prior to purchasing advertisement time during the Super Bowl is will the resulting profits exceed the opportunity cost. Advertising during the Super Bowl is a huge opportunity to reach millions of potential buyers. Advertisers must assess their marketing expenditures for Super Bowl advertisements and come to the conclusion that the profit gain will outweigh the amount spent on their commercials. The statistics show that a large number of viewers watch the game to see the commercials. If advertisers increase the money spent on adds to make them bigger, funnier, or more interesting they must be confident that the cost incurred will be returned in profits through sales. These ads are extremely expensive and that money could have been spent in other places such as payroll or product development.

Chapter 2: Key Principles of Economics
Jump in Rice Price Fuels Fear of Unrest
Thinking Critically Questions 1. What supply shift contributed to the price of rice increasing? The supply shift that contributed to the price of rice increasing was a ban on rice exports by top exporters Egypt, India, and Vietnam. These countries account for roughly one third of the world's rice exports. 2. What demand shift contributed to the price of rice increasing? The demand for rice increased because the supply of rice decreased. The increase in demand has driven prices higher. 3. Why would the price of rice contribute to social unrest? Rice is a staple for some countries and rising food prices in poor countries will cause people to resort to drastic means to feed their families.
Voluntary Exchange The principle of voluntary exchange relates to this article by showing how the countries that imposed an export ban on rice disrupted the rice market globally. To control prices and inflation within their own country, Egypt, India, and Vietnam imposed a ban on rice exports. While their intentions were good, they were self-serving. These countries account for one-third of the global supply of rice. The ban on exports drove the supply of rice down causing the price per ton to double in three months. Voluntary exchange between two countries benefits both countries. By eliminating exports of rice, these governments have caused countries that relied upon them for rice, to take drastic measures to feed their population. The Philippines, the world's largest importer of rice, now must tap into emergency stocks while smaller countries, such as Cameroon and other African countries that cannot be self sufficient, are at risk of social unrest due to rising food prices. When Egypt, India, and Vietnam were exporting rice to sell to other countries such as the Philippines and Cameroon, these countries were able to feed the population while exporting their own goods stimulating their economy. Without the rice imports, these countries must now pay the rising prices or produce the shortfall themselves.

Chapter 2: Key Principles of Economics
The world's most expensive whiskeys
Thinking Critically Questions 1. Why the sudden interest in premium whisky? The article states the soaring interest in whiskey was due to a strong economy. This would translate into more money for consumers to spend on luxury items. 2. Why is speculation in this market risky? This is a risky market because of the fact that some distillers could flood the market with limited edition bottles aimed at being rare and put on the market for high prices. Also, the economy could turn and investors would be left with a bottle of whiskey for which they will not get their return on investment. 3. What type of individual should buy these whiskies? People who buy these expensive whiskies should be independently wealthy due to the fact that this market could turn for the worse at any time. Whiskey bottles are luxury items those with disposable income can afford.
The Principle of Opportunity Cost Collecting whiskey bottles would be an example of the principle of Opportunity Cost. The high dollar amounts paid for rare whiskey bottles are seen as investments. This investment could be spent in another more stable and reliable market. But by investing in the value of the bottle now, the investors are hoping the value will increase over time. The article states that some collectors or investors actually buy two bottles; one to sip, one to save. By purchasing two bottles and drinking one, the collectors could actually help the value of the bottle saved because it now has one less rival. This will aid in the value of the bottle by making the bottle an even more limited resource or scarce.

Chapter 4: Demand, Supply, and Market Equilibrium
The fastest-growing Brands in Sports
Thinking Critically Questions 1. Is anyone worth $10 million a year? Yes. If a player is paid $10 million a year, the organization he or she is employed by must expect that the return on investment will outweigh that player's salary. Any athlete that is paid that much money must be marketable and sell jerseys and autographed balls. They more importantly must be able to sell tickets to games and possibly lead the team to a championship which will also generate more revenue for the organization. 2. List some likely areas where the Cleveland Cavaliers have increased cash flows as a result of drafting LeBron James? Cash flows to the Cleveland Cavs has increased from LeBron James by his ability to sell tickets, jerseys, and other licensed merchandise of which the Cavs get a cut of the profits. Also, the Cavs have crawled from the cellar of the NBA and now are a good team. This equates to more people in the seats, eating more popcorn and drinking more soda and buying more big foam hands. 3. LeBron James becomes a free agent after the 2009-2010 season. What will the team owner attempt to do before that time? An intelligent team owner will attempt to sign him to a long term contract prior to his services being on the open market where he can look at offers from others teams.
The Marginal Principle The marginal principle is applied in this article by showing how teams increase their costs (payroll) in the hopes of reaping the maximum benefits. The Cleveland Cavs increased their costs when drafting LeBron James. Since then, their benefits have skyrocketed. The cost of his salary has been returned by tickets and merchandise sold by his play and popularity. A team can increase costs and invest in player salaries by paying them an obnoxious amount of money each year, until the marginal benefits match the marginal costs.

Chapter 21: Market Efficiency and Government Intervention
The Trouble with Subsidies
Thinking Critically Questions 1. What are subsidies? Subsidies are a form financial assistance used to support failing businesses or encourage certain activities or types of spending. 2. What are tariffs? Tariffs are a duty or tax imposed on imports and is usually utilized to restrain or slow trade between nations. 3. Why has the global recession encouraged protectionism such as tariffs and subsidies? Governments are attempting to bailout failing inefficient businesses that, if they were to fail, would eliminate jobs worsening the recession. Protectionism is aimed at empowering domestic businesses but has been seen to do harm as well in the sense that it causes other countries to react by their own protectionism policies.
Voluntary Exchange The article demonstrates multiple examples of voluntary exchange being impacted by protectionism. One example is the steel industries "Buy American" campaign. The author states that an increase in production could create 1,000 jobs. The author goes on to show how protectionism "retaliation" has the potential of eliminating 1% of the 9 million metric tons of steel exported by the U.S., which in turn would cut 6,500 jobs. While countries will still trade with the U.S., their own protectionism will impact the U.S. economy by empowering their domestic companies and forcing higher tariffs on American imports.