1. The real authors of the book ‘The mystery of the Invisible Hand’ are William L. Breit, and Kenneth G. Elzinga. The first one is a professor of economics at Trinity University in San Antonio, while second is connected with University of Virginia. Interestingly, they have also written three other books under the same pen name: ‘The Fatal Equilibrium’, ‘Murder at the Margin’ and ‘A deadly indifference’. Authors, instead of signing their book by their real names, came up with a fictitious pen name, Jevons Marshall. To find out what stands behind this name and why authors decided to use this name we need to look at this as two separate names. The clues might also be quotes on every chapter beginning. Authors have quoted people like William Stanley Jevons and Alfred Marshall, whose names are in the pen name. William Stanley Jevons was an English economist and logician. Alfred Marshall is said to be one of the most influential economists of his time. He introduced ideas of demand and supply, marginal utility, cost of production into a coherent whole. Widely believed to be one of the founders of economics. Connection of two famous economists’ names, makes the book more professional and highlights its economic character.
2. If a person owned all the land or all the paintings of one artist, can not charge monopoly price. It is because paintings and land are durable goods. Over a long period of time they start to compete with themselves. In addition, no one will buy a land from the owner of all lands without guarantee that other parcels would be sold at the same price. It is called Coase Conjecture. The monopoly is itself in price competition. Also a monopolist is a price maker, so there is a threat he will set high prices, which will scare away consumers. That is why monopolists must set up lower prices, because they do not know individual valuations of durable goods for each customer.
3. The diminishing marginal utility can be simply explained as a phenomenon occurring when we have a lot of a certain good. When we get an additional unit, the extra utility derived from that good is decreasing. Professors say that after they teach the same course for 8th or 10th time it is not equally satisfactory as at the beginning of their teaching. Professor Spearman sees it differently. He points out that although the content of the course and lectures might be the same every semester, students are new. Every semester, every year students change, they ask different questions, have different opinions and conclusions. This can change the content of the course and as a result change the good. So professors don’t get additional units of the same good, they receive a new, differentiated good. It can be also understood in the way that if students change the course, professors derive new conclusions, improving their lectures, which will as a result cause increasing marginal utility.
4. A consumption good is the kind of good that we sacrifice our income to get. They are also described as goods for personal use by consumers. Professor Spearman’s daughter, by saying that work for him is a consumption good was trying to explain how important job is for economist. Work for Henry Spearman is a hobby, lifestyle and everyday life. He enjoys economics and try to apply it in every sphere in life, explain real-life problems with use of economics. His free time and leisure is also tightly connected with his specification.
5. Professor Spearman argues that the fact that a lot of economists become deans of Business Schools is a matter of supply. To explain this he compares economics professors in liberal arts schools and in business schools. In liberal arts schools the supply of economics professors is very low, and the demand exist because a lot of students are willing to take economics classes. That is why those professors are on higher salaries than literature or history or other humanities subjects’ teachers. But in business schools, the supply of economists is much higher. And the biggest demand is for finance and accounting teachers, not for economists. As the result economics professors’ salaries are lower in business schools than in liberal arts schools. That is why it is much more worth for them to become deans in business schools as they salaries are obviously higher.
6. Compton argues that if the city raised money by taxing hotel rooms, stadium was paid by non residents. So the building hasn’t cost citizens of San Antonio a thing. What he seems not to think about is the opportunity cost of building a stadium. Even thought residents did not pay directly from their pockets to fund a stadium they have paid a cost of goods foregone. Which is a second best alternative. For the money raised by hotel room taxes, they could have fund some other public goods, for example health care programs, schools, parks, playgrounds for children and so on. The total cost paid by residents of the city is the opportunity cost of building the stadium.
7. Cost of getting not listed houses is bigger that the cost of those listed with agencies. All houses are for sale, theoretically. Even though they are not listed with any of estate agencies. But as long as you as an owner are willing to sell your house and can tell the price that will satisfy you, it is indeed for sale. The reason why not listed houses are more expensive is because they have an added personal value. An owner who is not willing to sell his house and move out, is personally connected to his house. In order to sell it they will need to receive very high price, which will cover the costs of buying or building and their individual value of their house. The houses which are already for sale, listed by an agency do not have this added, personal value. It is because the owner is willing to sell it without sentiments.
8. Professor Henry Spearman claims that arbitrage is the economic death of discrimination. Arbitrage is in simple words a resale. In order to apply and have benefits from price discrimination of 3rd degree there must be no arbitrage. If the discounted price for elderly would be very low, for example at price 0, privileged people to buy it would have bigger incentives to buy big quantities of tickets and resale them to people who do not yet qualify for a discount. This would make museum sell less ticket at regular price and as a result make losses in their revenue.
9. Most of the artists prefer to arrange expositions and sales in just one art gallery instead of many. The reason for that is connected with a case of externalities and free riders. If only one gallery has rights to display and sell paintings of one artist, they are more likely to promote it widely. It is because an increase in demand for those paintings will make them make more revenue as there are no other sellers, they simply have no competition and operate in monopoly type market. If other art galleries had rights to sell the same authors works of art, they could simply use an increase in demand caused by other art galleries promotion to increase sales. It will generate externalities, and make them free riders.
10. The bell curve represents the relationship between the age of the artist and his paintings market value. In early years of artist’s life, he has no reputation yet, is not well known and his death would not have a significant positive impact on the value of his works of art. As the elderly artist do have a reputation, he is though not expected to paint more. His sudden death would also not make a difference for his market value. But painter in the book, Tristan Wheeler was in his best years, in the peek of his popularity, gaining more and more international attention. He was expected to paint more great paintings, had interviews and art displays planned ahead. His death would not bring him any benefits in this stage of his life. That is why we can exclude suicide. Spearman figured out that the person who will have the biggest incentives to have the artist dead would be the person who is collecting his art. That person is Dr Ramos. To avoid being accused of murdering the artist Ramos planned ahead to hide paintings and report a theft. If he had no paintings, he will not have incentives to kill, that is what he wanted to make police think. Not insuring them protected him from being a suspect in this case. Spearman has connected all of those facts, as well as mysterious theft and later appearance of paintings and the cost-benefit analysis to exclude suicide. With a little help from his students, as well as his special skills to effectively observe surrounding environment and people he in detail explained who and why have killed Tristan Wheeler.