Economics 3 Essay, Research Paper
A Price to Pay
“The Fatal Equilibrium” by Marshall Jevons describes a story of murder and betrayal within the Harvard University faculty. The novel also explains the economic ways of thinking that people apply for decision making in their lives. Economics is in ways like the air. It surrounds us in every way no matter where we live, work or play. Economics play a great role in our lives whether or not we want it to be. Economics is not just dollar and cents, it’s the way people interact with one another for goods and services. The characters in “The Fatal Equilibrium” all exemplify a way of economic thinking in their daily decision making.
The main character in the novel, Henry Spearman, an economic professor at Harvard, heavily uses his economic sense to observe and act out his decisions. For example, early in the novel Professor Spearman uses economics to decide whether or not he should interrupt his work to have a talk with one of his colleague. He calculated that the opportunity cost would be losing time with his committee work. To make up for his committee work time he would have to lose lecture time which would finally result in losing income. Spearman doesn’t just recognizes economics in his work but also during his leisure time. The professor provided us with an insight on consumer surplus during a browse at a local mall. Spearmen notices that the store uses a moving discount meaning that an item will be discounted every week until it has been sold. His thought was that if a customer waited until the price was attractive, they risk losing the item. If they bought it too early they could lose they savings that they could of had.
Dennis Gossen, the economist waiting to be promoted by the committee, supported the idea of variety among the same items. He supported the idea that variety
will help bring out competition resulting in lower consumer prices. His belief is competition is the reason why our world is always improving, why we are now able to go further in society, why we are able to live the lifestyle that we do. Sophie Ustinov, a chemist, may seem like an anti-economic person in the novel but she too is involved in economics. Disapproving of the economist’s ideas, Ustinov complains of the different brands of the same product in grocery stores. She chooses the cheapest brand with the exception of dog food. With dog food she carefully selects the most exotic flavor. But aren’t all dog food the same too? She may not know it but she is involved in economics by choosing the fanciest dog food. Ustinov tries to maximizes her utility by shopping at midnight. With less customers she can shop quickly and without the hassle of long checkout lines. She doesn’t want to spend any more time shopping when she could use that time for something more productive. The opportunity cost to shopping at the late hours with the lost of sleeptime.
Other characters in the novel were also involved in everyday economics. The members of the committee who voted to reject Gossen didn’t know about the severe cost when they turned him down. They were thinking about how they could maximize their utility by voting for Gossen. If Grossen was promoted, it would not benefit them in a significant way. They didn’t know that the price of rejected Grossen was losing their own lives. If they knew about the opportunity cost of turning down Gossen they would have change their decisions because the price of their lives outweighed all others.
The characters in the “The Fatal Equilibrium” all serve as an example of how people use economics as a way of life. As to the saying “economics is the study of how economists behave”, I believe that economic will always stand in our decision making life. The characters in the “The Fatal Equilibrium” supports this idea of economic being an everyday way of life.