Week 4 · Markets, Incentives & Institutions
How demand, supply, prices, and information coordinate the plans of buyers and sellers.
Your AI study mentor
A market is one way many separate plans become coordinated without one person directing the whole scene. Prices, demand, and supply can reveal information and adjust behavior, but only under assumptions worth naming. I combined mechanical practice with a boundary audit so you gain enough fluency to use the model and enough distance to see what prices coordinate, what they leave unresolved, and who may be absent from the picture.
A clean graph can make an outcome look inevitable. Keep asking which institutions, power differences, and unmet needs sit outside its lines.
Whose situation is not represented when this market is described only through price and quantity?
Start with the aims and questions so the readings have a purpose.
Use the prompt under each source to produce notes, not highlights alone.
Test the ideas through observation, analysis, or a small intervention.
Save the deliverables and check your work against the completion criteria.
Define what you are trying to understand before deciding that you have understood it.
When a reading uses a graph, treat it as a compact argument. Every line should answer a question about who wants what, under which conditions, and how plans meet.
Core material
4 guided readings, in the order shown.
Steven A. Greenlaw, David Shapiro, Daniel MacDonald, and contributors · OpenStax
The core demand, supply, equilibrium, and market coordination model.
Read sections 3.1 and 3.2. Reproduce the gasoline equilibrium table in your notes, then explain in words what happens above and below equilibrium.
CORE Econ · CORE Econ
A research-informed introductory microeconomics text organized around scarcity, institutions, incentives, strategic interaction, markets, inequality, and public policy.
Return to section 2.2 and connect incentives to the supply side. Write down one place where the price mechanism is useful and one place where it is incomplete.
Adam Smith · University of Chicago Press
Smith's foundational investigation of the division of labor, exchange, prices, wages, profit, and the sources of national wealth.
Read Book I, chapter 3. Explain in your own words why the extent of the market matters for specialization and exchange.
F. A. Hayek · American Economic Review
A classic argument that prices coordinate dispersed, local, and changing knowledge that no central planner possesses in full.
Read the essay once. Identify the kind of local knowledge a price system can communicate and one kind it cannot settle by itself.
7 study actions turn the reading into observable work.
Optional resources for going further after the reading plan.
A rigorous philosophy-of-science overview of what models are, how they represent, and how they relate to theories.
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