All Hallows High School



All Hallows HSSummer Reading ExamHistory 12The Fatal Equilibrium Study GuideThe Fatal EquilibriumMarshall Jevons The Fatal Equilibrium is a mystery novel in which the hero, Professor Henry Spearman, applies economic theory to determine who committed a murder. Spearman uses economic theory as a lens to scrutinize all human behavior, and his character is based on Milton Friedman, who won a Nobel Prize in economics. Mysteries have heroes who solve the crimes in their own distinctive manners: Hercule Poirot (Agatha Christie) uses psychology; Miss Marple – women’s intuition; Rabbi David Small –Talmudic reasoning. The Fatal Equilibrium is a “British traditional” within the mystery genre. It has no explicit sex or violence. British traditionals are written as cerebral works of the mind, rather than adrenaline. Examples: Emma Lathen, Ellery Queen, Dorothy Sayers, G.K. Chesterton, Agatha Christie In this type of book a game is played between the author and the reader - it is the most fundamental characteristic that distinguishes a mystery from other works of fiction. The game is for the reader to figure out the murderer before the author reveals the solution. Author's Rules: Author must not introduce the murderer at the end of the book. The reader must know all the facts relevant to the solution – all the clues must be in the text. Everything that occurs must be possible. Unlike fantasy and science fiction. There are no miracles in mysteries. Rooms cannot decompose and the murderer cannot be a demon or ghost. Facts must be facts. If the Missouri flows into the Mississippi in real life, then the author should describe it that way. Reader Rules: Reader cannot look at the end. Reader cannot just guess – must make a legitimate attempt. Guesses do not count, only well-reasoned arguments and deductions.Study GuideAnswer the following questions as you read the novel.1) What was the central conclusion of Dennis Gossen’s research on information in labor markets? How does this research on labor markets relate to the solution of the murder mystery? 2) Valerie Danzig and Oliver Wu objected to the assumption concerning human nature Dennis Gossen displayed in his research. What were their objections to Gossen’s assumptions? In Chapter 11, Henry Spearman defended Gossen’s approach in an attempt to show that Danzig and Wu were misguided in their criticisms. What was Spearman’s argument?3) In Chapter 3, Henry Spearman indicated that as his income rose he was less able to afford interruption and diversion from his work. What concept in economics explains this?4) How did Henry Spearman use economics to account for his father’s polite behavior to the customers in his tailor shop and his father’s irritable behavior to his family? How is this principle of human behavior related, if at all, to the behavior of landlords in rent-controlled apartments? Are there other applications of this principle in a students’ experience? [University administrators towards students about automobile parking, the allocation of dormitory space, or the distribution of tickets for popular concerts or athletic events]5) In chapter 4, Oliver Wu used cost-benefit analysis to determine whether he should steal a book from the Harvard University Library. He also applied this type of analysis to other questions of illegal behavior. Describe the cost-benefit reasoning as it applies to theft and other crimes.6) In chapter 5, Henry Spearman realized that his daughter, Patty, confused “demand” with “quantity demanded.” What is the distinction?7) In Chapter 6, Professor Spearman explained that the pricing system in Filene’s bargain basement is related to what Alfred Marshall years earlier called “consumer surplus.” How are the two related? What are some examples of goods that yield the enjoyment of substantial consumer surplus? What connection is there between Filene’s basement and a Dutch auction?8) In chapter 7, the economist hero explained why he would be willing to shop longer for an automobile than for a paring knife. Why does an understanding of this argument ultimately provide the key to the solution of the mystery?9) In chapter 7, Henry Spearman explained the price of rare postage stamps to Christolph Burckhardt. His explanation rejects Karl Marx’s labor theory of value. [in that subjective evaluations determine price rather than labor time expended] What are other applications of this principle where the value or price of a product seem unrelated to its labor input? Are there examples of goods or services where the labor theory of value might apply to explain market price?10) In chapter 8, Morrison Bell was critical of Dennis Gossen’s argument that business firms should be permitted to bid for al license to pollute. What was bell’s objection to Gossen’s argument? From an economic perspective, what was the flaw in Bell’s position? Note: can do a lot of this! Explain why a market for tradable permits is better – people who value the good more get the good. Do rich companies get all of the permits? They can afford more, but they can also afford more scrubbers and cleaners.11) In chapter 8, Foster Barret was portrayed as believing income should be distributed according to the refinement of tastes in society in contrast to a market system in which those with elegant tastes often receive the lowest salaries. Do you agree with Barrett’s position? [this is an excellent juncture to discuss the difference between equity and efficiency]12) In chapter 8, Sophie Ustinov expressed the opinion that there were too many brands of products that are chemically identical. Examples were liquid bleach, aspirin, and evaporated milk. Because the prices of the various brands of such products sometime differed, she always purchased the brand with the lowest price. Was Professor Ustinov being rational?13) In chapter 11, Henry Spearman defended the position that trademarks and brand names provide useful information to consumers. What is the basis for his argument? Is it persuasive? Why or why not?14) In chapter 13, Sophie Ustinov claimed that she was irrational for eating so much food while a passenger on the QE2. Spearman argued that she was rational and based his argument on marginal utility theory (not the quality of the cuisine on the vessel). Reconstruct his argument and apply it to explain how rational consumption patterns might differ at two eating establishments: an all-you-can-eat buffet vs. a la carte.15) How are prices determined?16) How are wages determined?17) Environmental Policy (Bidding for rights to air)18) Opportunity Costs19) Short Run vs. Long Run Costs20) Consumer Surplus21) Conclusion to Book/ Relative Prices22) Search Theory ................
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