Chapter 6: Supply, Demand, and Government Policies

Whereas the last two chapters examined the role of an economist as a scientist, chapter six delved into the role of an economist as a policy adviser. The first thing I found interesting in this chapter were the concepts of price ceiling and price floor because I had never put too much thought into how much influence the government often has over the market. Mankiw clearly opposes binding price ceilings, judging by how he argues against their restriction of the market early in the chapter. The examples confused me a little bit, but I understand the concept: the more restrictions, the less the free market principles and the invisible hand can guide the market towards prosperity. That seems to be the goal of this chapter: drill in the concept that binding price ceilings are bad for the economy and for free market values. Basically the same old lesson with price floors, except price floors lead to surpluses if they are binding. The most relevant part of this chapter was when Mankiw talked about the group that was most affected by minimum wage laws: the market for teenage labor. I had never thought about that before, and it's very interesting to think that the jobs I could hold throughout the rest of high school and in college could be dictated by the minimum wage laws. All in all, this chapter was not very difficult to read or understand. I would give it a 1/3 for difficulty.