The Undercover Economist by Tim Harford Note: The page numbers in italics refer to the old edition Introduction & Chapter 1: 1) What does the story of the Soviet official tell us about the free market? (p.2 / p.2) 2) How do you explain the high price of coffee at railway stations? (p.7-8 / p.7-8) 3) What is the core message of Ricardo’s model of economics? (p.9-10 / p.9-10) 4) Explain the concept of the “Green Belt”? (p. 19) Chapter 2: 1) What is the real reason for the large range of products at coffee shops? (p.40 / p.34-35) 2) What was unfair about Café Costa’s fair trade coffee? (p.37-38 / p.33) 3) What strategies are used by companies to target customers? (p. 40-45 / p.36 -40) 4) What is the “invisible cappuccino”? Chapter 3: 1) Why is there “truth” in prices in the free market? (p. 70-71 / p.62) 2) What are “marginal costs”? (p.72 / p.63-64) 3) What two elements (to firms and to customers) do prices represent? (p.76 / p.67) 4) Which problem of taxation does Tim Harford describe? ( p.78-81 / p.68-72) 5) What is the “head start theorem”? Chapter 4: 1) What are the three main reasons for the fact that the free market does not always work? (p. 90-91 / p.80) 2) What is Tim Harford’s main objection to the current car taxation? (p. 93-94 / p. 82-83) 3) What are externalities and what is an externality charge? (p. 90-95 / p. 80-85 ) 4) How did the City of London solve the disastrous traffic situation in the inner city? (p.109 – 110 /p. 98) Chapter 5: 1) Why is it difficult to buy a good second-hand car? (p.124-125 / p.112-113) 2) What are the effects of asymmetric information on the free market? (p.127-128 / p. 115-116) 3) What are the three factors that prevent the market from working perfectly? (p.155 /p.138) Chapters 6 and 7 will not be tested in the exam. Chapter 8: 1) Why do certain poor countries e.g. Cameroon stay poor? (p.215&229 / p.188&200) 2) Where is economic wealth said to come from? (p.208 / p. 182 ) 3) Explain the theory of “diminishing and increasing returns” and the “big push” theory? (p.209 – 211 / p.182-184) Chapter 9: 1) What is the effect of trade barriers? (p.238-241 / p. 209 -211) 2) What are the five most prominent features of globalisation? (p. 244 / p.214) 3) Harford argues that increased globalisation does not cause increased pollution. What reasons does he give? (p. 247-248 /p.217-219) 4) What does the development of South Korea illustrate (p.257-258 / p. 226) Chapter 10 1) What characterised Mao’s economic policy? (p.268-270 /p. 235-237) 2) In what ways did Deng Xiaoping change industrial and agricultural policies? (p.271 - 277 / p.238-245) 3) How does Harford explain the extreme economic growth in China? (p.279 -282 / p.245- 247) 4) What are the 3 main benefits China gained from opening its economy to the world? (p.283 / p. 248) 5) How does Harford justify the terrible conditions in sweatshops in China and other Asian countries? (p.256-257 & 288 -289 / p. 224-225 & 253-255)