Chapter 22

This is the last chapter in the course.  I hope you have enjoyed the course and are saddened to see it end.  What concepts or theories did you find most interesting and/or useful?  Is there an area where you changed your thinking? I enjoyed the course and gained useful knowledge that I can chat/debate with my friends and family about. I am not saddened to see it end though because I am ready to move on to the next semester! I enjoyed Chapter 20 and the information of Income Inequality and Poverty. I was unaware of how much inequality exists in our country,  and it was interesting to read about the measurements of inequality. I also enjoyed the material I learned in Chapter 12, The Design of the Tax System. This Chapter changed my way of thinking with the Ability to Pay Principles and Benefits Principle and our overall tax system. Chapter 6, Supply, Demand and Government Policies was the Chapter that I learned the most about supply and demand. Learning how to blog was pretty fun too!

Chapter 21

What did you find most confusing? 

The Theory of Consumer Choice - The concept of indifference curves was hard to understand at first, but I feel comfortable with the explanations and the relationship between the indifference curves.  I would say the four properties of the indifference curves and the differences between them were confusing for me. 

What do you think about the concept of indifference curves in the context of budget constraints? 

It is an interesting concept that the slope of budget constraints equals the relative price of goods. But overall makes sense to me.

Does the concept of indifference curves add to your understanding of demand curves? 

Yes, you buy what you can pay for and sometimes you have to choose one product over another. Which effects the demand curve of markets.

The existence of prices and income clearly leads to budget constraints.  Do you think about trade-offs for large purchases (ie a car payment versus rent/mortgage)? I do not think about trade offs right now, I am paying the bills and getting through college. I have no car payment or mortgage payment. Vehicle is paid off and I rent. 

How about small purchases?  Trade offs for smaller purchases, good healthy food for a healthy body, entertainment for quality of life.

Does timing matter (probably you aren't purchasing both a car and a house at the same time)?  

Timing matters, typically a consumer is not going to purchase high dollar items at the same time and will wait until one is affordable. Budget timing. 

How does the concept of indifference curves inform your thinking about purchases? To be honest it probably will not effect and or inform my thinking when I am making purchases.

Chapter 20

Income Inequality and Poverty

The U.S. Income Inequality is measured when you divide families by income into five groups.  In 2011 the bottom fifth of all families received 3.8% of all income and the top fifth received 48.9%. The Top 5 percent made 21.3% of all the income, leaving 26% of the remaining income to be distributed by the second, and third, and fourth income groups. When comparing to inequality around the world the comparison can be hard to measure because there are a lot of countries that do not have the data to compare to. When comparing the 25 most populous countries the available data shows that all of them have disparities between the rich and the poor. When the countries are ranked by inequality the U.S. ends up showing higher inequality disparity than most other economically advanced countries.  Other measures of inequality include what people care about such as: In Kind Transfers, Economic Life Cycle, and Transitory vs. Permanent Income. 

There are political philosophy groups such as Utilitarianism, Liberalism and Libertarian-ism that help choose policies to redistribute wealth. Those policies are: Minimum Wage Laws, Welfare, Negative Income Tax, In Kind Transfers and Anti- Poverty Programs and Work Incentives.  In conclusion, the measurement of inequality and poverty is difficult because of all economic, social and political factors involved.

Chapter 19

Post three of your "margin notes" from your reading of the chapter to your blog.  Why did you make the comment you made in the margin?  What did you find confusing, useful, or important about the passage you commented on?

Human Capital: The accumulation of investments in people, such as education and on the job training. I found the information in this section of our text useful because recently at a Town Board meeting one of our Trustees was discussing personnel reviews and made the statement that Education is extremely important for staff at all levels and that it needs to be a priority for the Board to budget funds for next year. I was able to relate to the reading in the text to a recent work perspective and it makes more sense to me now why he made that point. Also, a benefit for me. 

Discrimination and Gender Differences: I am still shocked by the gender/discrimination regarding differences in pay. Although in most competitive markets the level of discrimination tends to be limited. I found it interesting that discrimination can still persist in markets if customers pay more to those companies or if the government passes laws that require companies to discriminate. I wonder what government law that would be?

Beauty:Getting a job because your beautiful. Something that I did not even think about so this section was also an interesting read. Another great industry that has high demand, weight loss gimmicks, skin care, boob implants, and the list goes on. People pay a high price to be beautiful, because beauty sells. I think that I was aware of this just not that beauty is used as an indirect measure of your skills or abilities. Interesting.   

Chapter 18

Pretend for a moment you are the instructor developing this course.  Write 3 short answer questions for an exam over this chapter that you believe cover the most important points in the chapter. Post all three questions on your blog.  Give an example of a great answer and an okay answer to each question. (Be sure to differentiate between the two responses.


Question 1: What are the most important Factors of Production?
Great answer:There are three important Factors of Production: Labor, A company or firm will consider the size of its workforce and how it will effect the amount of output produced. Land, companies have to decide which is better for their output whether to rent or purchase land which are determined by supply and demand of the product being produced. Capital, is the equipment and structures that are used to produce the companies goods and services. 

Okay Answer: Labor, Land and Capital. 

Question 2. What are the the main causes of the Labor Demand Curve to shift?
Great answer: There are three main causes to the Labor Demand Curve shift: The Output Price, which is the value of the marginal product times the price of the firms output. Technological Change, which can cause changes that reduce labor, technological advances raise the marginal product of labor. The Supply of Other Factors, one factor of production can affect the marginal product of other factors. 

Okay answer: The Output Price, Technological Change, and The Supply of Other Factors. 


Question 3. What are the main causes of the shift in the Labor Supply Curve?
Great Answer: There are three main causes of the shift in the Labor Supply Curve, Changes in Tastes or attitudes towards work, nowadays the family sizes are smaller and women choose to work rather than stay home. Changes in Alternative Opportunities, labor in one market depend on the opportunity available in other markets, such as wage differences. Immigration, the movement of workers between regions and countries.

Okay Answer: Changes in Tastes, Changes in Alternative Opportunities and Immigration. 

Chapter 17

What do you think about anti-trust laws with respect to the cell-phone industry?  

I think that the cell phone companies should be responsible to abide by the antitrust laws. The competition between companies in our area is very competitive and their pricing is similar to each other for the services that they offer. 

Do you think the cell phone industry could be an oligopoly? 

In our area the cell phone industry could be an oligopoly. 

Why or why not?
Because of limited cell phone towers, and a smaller population. 

There are only three, maybe four cell phone competitors in our area.

Decision Box: 
Game Theory, the study of how people behave in strategic situations. The Prisoners Dilemma explains why cooperation is difficult between companies when it is beneficial to both, and the dominant strategy which is the best for one player in the game regardless of what others choose to do. All three of these play into the Decision Box, it works by showing the available choices/strategies of/for the players.   

  

What about Oligopolies is most unclear to you?

I am still trying to figure out antitrust laws. I understand why we have them but as a whole they seem very complex. I understand some of the violations that companies may be held liable for but it seems that there is a lot of grey area. Any suggestions on additional reading materials?

Chapter 16

Can advertising make markets either more or less competitive?

I think that advertising do make markets more competitive.

How?

If one company advertises a product for a lower price than its competitor that drives the competitor to lower their cost for the same product. The example in our book talks about the cost of eye glasses in states that allow advertising being lower rather than in states that do not allow advertising. From this example I feel that advertising is a benefit to consumers because it drives down the cost when companies are competing for consumers to purchase their product. I am a firm advocate for consumer awareness though and people should educate themselves about their purchases and whom they are purchasing from. 

What was the most interesting thing you learned in this chapter?  

Brand Names.

Why was it interesting to you?

As a consumer, I would have to disagree with the critics of Brand Names. My example would be to compare Pepsi to store brand Cola. Yes, I have purchased both and there is no comparison when it comes to flavor. therefore I prefer a Pepsi over Cola even if it does cost more. I would have to agree with the economists that defend brand names and their quality. I'm thinking of the saying "you get what you pay for."