ECO HW 6/7

1. What are the two types of market failures?  Producing too little or too much of the good or service.  Producing a good or service that gives raise to the public.

2. What gives rise to the first type of market failure? When the cost is too much of the good and service is produced by the market service

3. What does the second type of market failure gives rise to?  Is when the market does not produce anything of the good or service

4. What are the two types of spillovers?  Spillover cost and spillover benefits

5. What are spillover costs? An individual or a firm, that takes production or consumption, that causes a cost of the production or consumption.

6. What are spillover benefits? When an individual in cost a benefit as a result of the production of consumption of another individual or firm. An example would be a laundry firm polluting the area and when you are walking by, you smell toxic smell and the laundry firm doesn’t compensate you for the smell you’re inhaling. They’re undertaking a spillover action for both parties.

7. What are the economic consequences of both spillover costs and spillover benefits? Support your explanation graphically. As a result of spillover cost, we can see that the firm can use resources for free by increasing supply. The firm will not be only be able to offer its products at a lower price. Another way is to raise special taxes on the unit of output.  For the spillover benefit,  characterized by under additional resources. The government has to subsidize consumer’s education. Subsidize the production of supply of education. When the spillover benefit is large, the government can take the good, an example the US Postal Service.

8. How does the government correct for both negative externalities and positive externalities?  Government can play a role in reducing negative externalities by taxing goods when their production generates spillover costs. The taxation effectively increases the cost of producing such goods. Government can play a role in encouraged positive externalities by providing subsidies for goods or services that generate spillover benefits. A government subsidy is a payment that effectively lowers the cost of producing a given good or service.

1. What is the purpose of the circular-flow model and products? Is to demonstrate total expendicture and model flows. Firms wanting to produce goods and services, and by making product. Firms go to households looking to buy or rent, good or services. For example,  firms wanting to purchase land, labor or capital.

2. What do firms need in order to produce goods and services? Stable working conditions and profit.

3. Who are the owners of the factors of production?  Small businesses or other firms

4. What are the of factor resources owned by households?  Land, labor, and capital.

5. In the form of what do households receive money income or payment from firms? Wages, interest, or capital.

6. What do households spend their income on? Goods and services produced by firms.

7. What does the financial system consist of? Borrowed money

8. What does the government’s ability to borrow money depend on? Transfer benefits, unemployment, and welfare payments.

9. What is the importance of a viable financial system? It is a system to meet demands of surviving in the changing environment, they’re adaptable.

10. Why do firms want to produce goods and services? Make profit

11. What are the types of reward or payment received by the different factor resources?

12. What do governments pay to households for using their resources?

13. What does all expenditures by the households, government, firms, and the rest of the world equal to? Households buy goods and services by the rest of the world. They buy exports. Total income received by households, rent. The measure of gdp.

14. What does GDP stand for? Gross domestic product

15. What do households do with the portion of their income that they do not spend? They save the money by putting it into banks or a financial system.

16. What are imports?  Bringing goods or services into a country from aboard for sale.

17. What are exports?  Sending goods or services to another country for sale.

18. What similarities and differences did you find between the assigned pages and the instructor’s prepared video? The similarities are that the instructor and assigned pages both explain the material very well. The instructor gives better examples.

1.Why do we need to consider the definition of GDP carefully? Economists relay heavily on GDP.

2. What is the difference between how we measure total production in microeconomics and macroeconomics?  In microeconomics, you measure population over total measure. In macroeconomics, you measure the total population over the total labor force.

3.Why does GDP include only the market value of final goods? Because it is calculated with everything in total.

4.What is the value of GDP if the quantity and price of eye examinations produced is 100 and $50 respectively? The price would by $500 because that would be the absolute final price.

5. Why does the value of total production equal to the value of total income? The total net worth of households and non-profit organizations. As one would expect, households with greater incme feature in the highest net.

6.What are the four components of GDP and their defining characteristics? Consumption, investment, purchases, and inventors. Consumption is purchasing a good or service. Investment is buying something in hopes of it being worth more in the future. Purchases are goods or services bought. Inventors are the people producing the good or service.

7.How can GDP be measured using the value-added method? Some products have a low-value added. Other goods and services are such that lots of values can be added as we move from sourcing the raw materials through the final product.

1.            How do you calculate the following: Real GDP, nominal GDP, and price index? To calculate Real GDP, designate a particular year as the base year and then using the prices of goods and services in the base year to calculate the value of goods and services in all other years. Nominal GDP is calculated by summing the current values of final goods and services. The price index is the average of the prices of the goods and services purchased by the typical urban family of four.

Economics HW 5/31/14

1.Draw a circle and in the circle, write “The Analysis of the Impact of Technology on the Economy.” Draw about 20 lines that look like sun rays around the circle.

 

2. Brainstorm to come up with words, phrases, people, and concepts you associate with the relationship between technology and the economy. President Obama, Steve jobs, Mark Cuban, Donald Trump, money, taxes, stock market, Wall Street, food stamps, iPhones, iPad, Samsung, Fiot, Hybrid cars are the future, solar panel windows on houses.

3. List any works of the impact of technology on the economy literature, movies, or songs you have read, seen, or heard of: In the movie, Wolf of Wall Street, you can see how important money plays a role in the stock market. In the movie, Social Network, you also see how a simple idea can make you large amounts of profit. In songs, you hear all the time about how fancy an entertainer’s car is. You can see how technology is beneficial in  an economic way.

4. Respond Yes or No to the following statements and think of a specific situation that exemplifies your position:

_Yes__ While frictional unemployment is short term, structural unemployment can last for longer periods because workers need time to learn new skills. For example, employment by U.S. steel firms dropped by more than half between the early 1980s and the early 2000s as a result of competition from foreign producers and technological change that substituted machines for workers.

__Yes__ Technological change helps economies avoid diminishing returns to capital.

__No___ Technological change shifts up the per-worker production function and allows an economy to produce more real GDP per hour worked with the same quantity of capital per hour worked.

__No__ Because of diminishing returns to capital, continuing increases in real GDP per hour worked can be sustained only if there is technological change.

_Yes__ In the long run, a country will experience an increasing standard of living only if it experiences continuing technological change.

__No__ Romer argues that the accumulation of knowledge capital is a key determinant of economic growth. Firms add to an economy’s stock of knowledge capital when they engage in research and development or otherwise contribute to technological change.

__Yes__ We have seen that accumulation of physical capital is subject to diminishing returns: Increases in capital per hour worked lead to increases in real GDP per hour worked but at a decreasing rate. Romer argues that the same is true of knowledge capital at the firm level. As firms add to their stock of knowledge capital, they increase their output but at a decreasing rate. At the level of the entire economy rather than just individual firms, however, Romer argues that knowledge capital is subject to increasing returns. Increasing returns can exist because knowledge, once discovered, becomes available to everyone.

__No__ Romer points out that firms are unlikely to invest in research and development up to the point where the marginal cost of the research equals the marginal return from the knowledge gained because other firms gain much of the marginal return. Therefore, there is likely to be an inefficiently small amount of research and development, slowing the accumulation of knowledge capital and economic growth.

Now that you’ve answered these questions, you are ready to experience the world in which Robert Solow and Paul Romer, the developers of the economic growth model and new growth theory respectively, live. So, open the book authored by Hubbard and enter.

Chapter 3 of Where Prices Come From: The Intersection of Demand and Supply

Vocabulary: Look up the following words in the dictionary (if necessary) and write their definitions.

The Law of demand: The inverse relationship between the price of a product and the quality of the product demand.

The Law of Supply: holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price causes decreases in the quantity supplied.

A change in demand: changes in consumer expectations about the future price of a good or future income can cause a shift in the current demand for the good.

A change in quantity demanded: a movement along in a given demand curve caused by a change in demand price.

A change in supply: when the suppliers of a given good or service have altered their production or output.

A change in quantity supplied: a movement along a given supply curve caused by a change in supply price.

Comprehension: Write your answers to the following questions in complete sentences:

1. What is the assumption that underlies the law of demand? Consumers will  buy more of a good when the price falls and less of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes.

2. What is the important distinction between a change in demand and a change in the quantity demanded?  In a change of demand, the price is expected to raise or drop. Change in the quantity demanded the price will raise or drop depending on a change in demand price.

3. Define the law of supply as used in chapter 3. Holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price causes decreases in the quantity supplied.

4. How do you feel about rise in product price at the supermarket? I do not agree with it, but I need to realize I have to be patient for a sale, or just go along with it and just buy the product regardless of the price.

Chapters 9-11

1. At what point did you realize what business cycle meant? How did you figure it out? In the reading, when it talked about the recession and Ford laying off people, I understood what the book was saying.

2. What symbols can you find in the assigned pages? Do you think they’re effective? In what ways might the characters names be symbolic? Some symbols I can find are money, demand, and prices. They’re effective because demand, prices, and money are used every day in our lives.

3. How do you think George W. Bush feels about unemployment? Mixery index? Would he say they are microeconomic or macroeconomic issues? Would he say they are good for individuals or for society? Personally, I do not thin k George Bush cares about unemployment because he is employed. He would say they’re both micro and macroeconomic issues. He would say they’re bad for the society.

4. Did any of you write any favorite sentences down or mark any passages you found significant? If so, which ones? What struck you about them? I did not find any significant passages.

5. What would you say to or ask Hubbard if he visited your classroom? I would ask him everything he knows about economics. I would also ask him using his knowledge, how can I be a better consumer.

6. How might this textbook be used effectively in a social studies class? In a science class? It will help you be a better person in the world of money. You will be able to understand the ways of money and the struggle people go through to receive their high paychecks. I don’t really know how this book would be beneficial in a science class, science is a completely different subject.

7. Inflation is very safe, but that comes about at the cost of economic freedom. There is always a tension between safety and freedom. Think of ways this plays out in our government and society today. What individual liberties have people given up due to safety? What issues are currently being debated in this area? People have traded in their expensive cars for cheaper ones. People are using less oil, and substituting it for hybrid goods. A lot of people in Miami, especially south beach, walk and ride bike more than using their cars because gas prices are expensive. 

Economics 5/17 Extra Credit

2.1. We must make choices because we live in a world of scarcity, which means that although our wants are _unlimited_____, the resources available to fulfill those wants are ____limited___.

3. Trade-offs force society to make choices when answering the following three fundamental questions:

3.1. _What__goods and services will be produced?

3.2. _How__ will the goods and service be produced?

3.3. _Who___will receive the goods and services produced?

3.4. The  __opportunity cost__ ___ of any activity-such as producing a good or service-is the highest-valued alternative that must be given up to engage in that activity.

3.5.1. What is the chapter title and what does it mean? “Comparative Advantage and The Gains from International Trade” what the title means is we will see how important international trade can be to us. The title tells us what comparative advantage is and it shows what is beneficial about international trade.

3.5.2. What does the introduction tell you?  The introduction tells you how important trade can be with other people. The introduction also tells you how the United States gets benefits interacting with other countries and we get good prices by trading with other countries.

3.5.3. What kinds of picture, charts and/or graphs are in the chapter?  There is a picture of president Obama, there is a graph explaining how international trade  is increasing importance to the United States, there is a graph showing the eight leading exporting countries, graph comparing exports and imports as a percentage of GDP, and a pie chart on how caterpillar depends on international trade.

3.5.4. What does the summary at the end tell you about what the chapter will be about? The summaries state the chapter will be about how international trade has been increasing in recent decades. Comparative advantage is the ability of an individual, a business, or a country to produce a good or service at the lowest opportunity cost. Autarky is a situation in which country does not trade with other countries. Free trade is trade between countries without government restrictions.

3.5.5. What are important titles and subtitles from the reading selection? “The Importance of Trade to the U.S Economy” “How Countries Gain from International Trade” “Where does Comparative Advantage Come From?” “Tariffs” “The Arguments over Trade Policies and Globalization”

3.5.6. Write “Who, What, Where, and Why” questions for the main topics in the selection. Who benefits from international trade? What are opportunity costs? Where can we find tariffs? Why is raising and lowering prices important to a good or service?

3.5.7. As you read, write answers to your questions

Anyone who participates in international trade will get a better buy off. Opportunity costs is the highest valued alternative that must be given to engage in an activity. Tariffs are taxes. Raising prices is good for the producer to make money. But, lowering prices is good for the consumer, there have to come to a median.