Economics

Understanding Demand Buyers and Sellers What effect does their interaction have? Agreement on the price and quantity traded The Law of Demand When a good’s price is lower, consumers will buy more of it. How is “demand” different from want or need? a consumer who demands is wiling and able to buy the good or service at a specified price How is consumption measured? By the amount of a good that is bought The substitution effect When consumers react to an increase in a good’s price by consuming less of that good and more of other goods. The income effect The change in consumption resulting from a change in real income Market demand schedule A table that lists the quantity of a good all consumers in a market will buy at each different price See Figure 4.3 on pg. 81 Why do economists create market demand schedules? To predict how people will change their buying habits when prices change Demand Curve A graphic representation of a demand schedule

Evaluate the economic systems we've discussed to determine which is the best and which is the worst system. The student must present a clear and reasonable criteria by which the systems are evaluated and adhere to that criteria.

Compare and contrast the economic philosophies of Adam Smith and Karl Marx. Helpful sites: http://mises.org/ Adam Smith (1723-1790 ) Karl Marx (1818-1883 )

1. Go to http://gmail.com 2. Your "user name" and address will be: This period (ex. P2, P3, P4, P5 or P6) Your last name Your first initial Your address should look like this...(If you're in period 2 and your name is Uriel Lara) P2larau@gmail.com 3. Set your password so it's easy to remember. You can use your normal email password, for instance. 4. Go to http://www.blogger.com 5. Log in using your NEW gmail address 6. Create your Blogger address just as you did your gmail address 7. Send definitions for Scarcity, Opportunity Cost, Capital Goods, Socialism, Capitalism, Adam Smith and Macroeconomic to naronhistory@gmail.com

What is Economics? Section 1: Scarcity and the Factors of Production What do the following have in common? Scarcity and Choice Economics is the study of how people seek to satisfy their needs and wants by making choices A need is something like air, food, shelter or water that is necessary for survival A want is an item we desire but is not necessary for survival Economics answers such questions as: What will happen to me if I go to the movies instead of study for this test? How many people should my company employ, and how much should it produce? How much should the national government tax its citizens and on what should it spend the money? Why not both? Why not hire everyone and produce everything? Why not have the government pay for everything? The Answer: Scarcity What is Scarcity? Goods, physical objects like clothes and shoes, and services like haircuts, doctor visits and acting in a movie, are all finite...there isn't an unlimited amount of them Not the same as a ...

1. Which type of tax takes a larger percentage of income from low-income groups than from high income groups? 2. Which type of tax takes a larger percentage of income from high-income groups than low-income groups? 3. What are the four characteristics of a good tax? 4. What is the “incidence of a tax” and what determines whether or not a producer can shift the burden? 5. What is the major source of federal tax revenue? 6. What is the “withholding” tax, and why does the government use this method? 7. What is FICA, and what two large government programs does it fund? 8. What are “tax incentives”? 9. What’s the difference between “mandatory spending” and “discretionary spending”? 10. Why is it easier for states to balance their budgets than it is for the federal government?

1. What are the phases of the business cycle? 2. What is the value of all final goods and services produced in a year called? 3. What is the difference between real GDP and nominal GDP? 4. If an employee loses her job as a result of technological change, what is she experiencing? 5. What measures inflation? 6. Who stands to benefit from inflation? 7. If your nominal income rises by 10% while the price level rises by 5%, how much will your real income be? 8. What is a market structure dominated by one large seller? 9. Give an example of a price ceiling and a price floor. How do they relate to inflation? 10. What are production costs that do not change with the level of output?

Here is a website that might be of interest to some of you who had questions about the Peak Oil theory. http://peakoildebunked.blogspot.com/ As it says in the header, the authors of the site do not hold to the abiotic theory. They just assert that the peak is way off in the future.

1. What is it called when a union and management negotiate a labor contract? 2. How are strikes damaging to workers and companies? 3. How are wages for a particular job determined? 4. What are the results of increased worker productivity? 5. If roofing skills are scarce in California, what effect might that have on wages? 6. What generally happens to the equilibrium wage when demand for worker is low and supply is high? 7. What were the major steps in the United State’s progression from an agricultural economy to a service economy? 8. If you gain human capital, what effect might that have on your wages, and why? 9. Give two possible reasons for the increased presence of women in the labor force. 10. Look at the chart on pg. 233. Why might wages for workers in retail be much lower than those for workers in construction?

1. What kinds of liabilities are sole proprietors subject to? 2. Why are many sole proprietors unable to offer advancement and fringe benefits? 3. Why does government allow natural monopolies? 4. How do general partnerships, limited partnerships and limited liability partnerships differ? 5. What are the disadvantages of partnerships? 6. How does a corporation differ from a sole proprietorship or partnership? 7. What information is required in a certificate of incorporation? 8. Why must stockholders pay taxes on dividends? 9. How do horizontal mergers, vertical mergers and conglomerates differ? 10. How might a corporation benefit by being multinational?

1. What is a market structure dominated by one large seller? 2. Why must perfectly competitive markets always deal in commodities? 3. Why does government allow natural monopolies? 4. What kinds of government monopolies exist? 5. What is an oligopoly? 6. What is a cartel? 7. Why are economists skeptical about most claims of predatory pricing? 8. Why did the government pass antitrust laws? 9. What are some examples of industries that have been deregulated since the 70s and 80s? 10. What have been the benefits of deregulation?

1. What example of a price ceiling does the text give? Explain. 2. Why do few people benefit from price ceilings? 3. How do rent control laws affect price equilibrium? 4. What two examples of price floors does the text give? Explain? 5. What will happen to suppliers in a market if there is a surplus of the good they sell, but no supplier can afford to lower prices? 6. List three reasons why a price-based system works more efficiently than central planning. 7. What do you think Adam Smith would think of rationing? Explain. 8. How do prices act as a “language” in the free market?. 9. What alternative is there to participating in a market controlled by government? 10. What’s another term for externalities? How does it affect price and supply?

1. According to the law of supply, what will happen to production as the price of a good goes higher? 2. What is the difference between supply and quantity supplied? 3. How does the quantity supplied of a good with a large elasticity of supply react to a price change? 4. What are production costs that do not change with the level of output? 5. How does the marginal product of labor change as more workers are hired? 6. What is the impact of diminishing marginal returns to labor? 7. Give an example of a fixed cost and a variable cost of a bakery. 8. How does a firm calculate marginal cost? 9. How does a subsidy affect supply? 10. How can regulation affect a producer’s output decisions?

1. What are the three characteristics of a demand curve? 2. What does it mean when the demand for a product is inelastic? 3. What is one good that can be considered a compliment for another? 4. What are two goods that can be considered substitutes? 5. What would happen to the demand curve for Metallica CDs if they become unpopular because people find out they don’t even play their own instruments? 6. What would happen to the revenue of a DVD rental store if the demand is highly elastic and the prices go up? 7. Name a good with elastic demand at its current price. 8. Why is demand for home heating fuels inelastic in cold weather? 9. How do we calculate total revenue? 10. What are the four factors that affect elasticity?

1. How does the government intervene to protect public health, safety and well-being? 2. What are the main programs through which the government redistributes income? 3. What are the differences between the public and private sectors? 4. What are some examples of “negative externalities”? 5. What are some examples of “positive externalities”? 6. Why are street lights an example of a public good? 7. How does calculating GDP help the government track the business cycle? 8. What are the phases of the business cycle? 9. What’s the difference between micro and macroeconomics? 10.What is the government’s role in encouraging innovation?