Okay - some info for you -

Price ceilings & floors:
http://www.reffonomics.com/pricefloor.html

Taxes & elasticity:
http://www.reffonomics.com/excisetaxes.html

Tariff graph:
http://apecon.us/tradetariffefficiency.gif

Agree or disagree, and why?
1. If the government taxes land, wealthy landowners will pass the tax on to their poorer renters.
2. A tax that has no deadweight loss cannot raise any revenue for the government.
3. If the government taxes apartment buildings, wealthy landlords will pass the tax on to their poorer renters.
4. A tax that raises no revenue for the government cannot have any deadweight loss.




Suppose the government raises $100 million through a $0.01 tax on widgets, and another $100 million through a $0.10 tax on gadgets. If the government doubled the tax rate on widgets and eliminated the tax on gadgets, would it raise more, less, or the same amount of money as before?

Ack...

Don't you hate it when you just get a kick in the head that you are SO FAR BEHIND on everything that it could take days to get caught up?

Ah, well. I forgot to post stuff on elasticity on Thursday before I left. We were in an intense discussion on what should be taught in US History...how exciting! After that scintillating conversation, I was too tired to think...I even forgot to take my grading home with me!

A good question from Keri:
"Alright, I keep trying to think of things that are either inelastic or elastic, straightforward one or the other, but in so many differnt cases I think of different scenarios in which case they could be both. First of all, can people name different things that are alwasy elastic and always inelastic? Second of all, on the AP test will it be really straightforward whether the items they are talking about are one or the other, or will I sit there and think about it too much? I mean, a car is inelastic if you need it to get to work and you live far away from work, but elastic when you are looking at a luxury car....there are alwasy so many variables to consider"

My quick answer: Yes, you will overthink it, because that's what Keri's do. But - on the national exam they will try to be as explicit as possible, so work on reading only what's in the question. Elasticity can (and is) a personal thing - what's elastic for me may not be for you. If it says, "assume that cars are an elastic good"...make sure you do! :) Any other comments from others?


Okay - some things on elasticity:

1. If demand is elastic and price is raised, what happens to total revenue? How can you prove this?

2. Why is industry supply more elastic in the long run than in the short run?

3. If price were increased from $40 to $42 and quantity demanded fell from 50 to 45, calculate elasticity, state whether demand is elastic, unit elastic, or inelastic; and find out how much total revenue was when price was $40 and $42.

(Okay, so those are simple. Or rather, they should be simple)
Let me find some brain stumpers... umm..

4. Other thing equal, an increase in the number of buyers for a product or service will increase demand. Baby diapers and retirement villages are two products designed for different population groups. The US Census Bureau website, http://www.census.gov/ipc/www/idbpyr.html , provides population pyramids (graphs that show the distribution of population by age and sex) for countries for the current year, 2025, and 2050. View the population pyramids for Mexico, Japan, and the US. Which country will have the greatest percentage increase in demand for baby diapers in the year 2050? For retirement villages? Which country do you think will have the greatest absolute increase in demand for baby diapers? For retirement villages?

**this is a question I used to use as an internet assignment. Remember, you must find the *PERCENTAGE CHANGE* in demand for baby diapers and retirement villages, then the *ABSOLUTE CHANGE* afterwards. There is a difference. Can you get one of the answers?

5. Joe loves Mello Yello and will spend $10 per week on it no matter the price. What is his price elasticity of demand for Mello Yello?

6. In an effort to 'support' the price of some agricultural goods, the Dept of Agriculture pays farmers a subsidy in cash for every acre that they leave unplanted. The Agriculture Department argues that the subsidy increases the 'cost' of planting and that it will reduce supply and increase the price of competitively produced agricultural goods. Critics argue that because the subsidy is a payment to farmers, it will reduce costs and lead to lower prices. What argument is correct? Is this a price ceiling or a price floor in action? Explain.

7. Lovers of classical music persuade Congress to impose a price ceiling of $40 per ticket. Does this policy get more or fewer people to attend classical music concerts?

8. The government has decided that the free-market price of cheese is too low. If the government imposes a binding price floor in the cheese market, what would that do to the price and quantity of cheese sold? Is there a surplus or a shortage?


Pick & choose, answer one, a few, or all. The more you work on answering, the better you will understand it.

Unit 2 Online Quizzes

If you didn't catch the email or comment post, you can continue the online quizzes through 2/26. The 2/19 was set when we had the test on 2/20 - since that is pushed back, so is the due date for the online quizzes.

So...2/26. :)

KM

Why?

Can anyone explain why these sold for $1300?


http://cgi.ebay.com/2-The-Police-Tickets-Madison-Square-Garden-MSG-NY-8-3_W0QQitemZ220082588838QQihZ012QQcategoryZ16122QQrdZ1QQcmdZViewItem

:)

Elasticity

Here is some info on elasticity:

http://www.reffonomics.com/elasticity1.html (animated gif file)

http://apecon.us/tanstaafl_files/ (38 minute video file, a lecture from another teacher)

http://en.wikipedia.org/wiki/Price_elasticity_of_demand

http://hspm.sph.sc.edu/COURSES/ECON/Elast/Elast.html (interactive tutorial)

http://economics.about.com/cs/micfrohelp/a/priceelasticity.htm


Some questions for thought:

1. When would you want to own a business that sells price-elastic products? Why?


2. The rent for apartments in New York City has been rising sharply. Demand for apartments in New York City has also been rising sharply. This is hard to explain, because the law of demand says that higher prices should lead to lower quantity demanded. Do you agree or disagree? (and, as always, explain)

3. Taxicab fares in most cities are regulated. Several years ago, cab drivers in Boston obtained permission to raise their fares 10%, and they anticipated that revenues would increase by about 10% as a result. They were disappointed, however. When the commissioner granted the 10% increase, revenues increased by only about 5%. What can you infer about the elasticity of demand for taxicab drivers? What were cab drivers assuming about the elasticity of demand? (You may not be able to answer this one without looking up other ways to determine elasticity in your book) :)

Supply & Demand Together -

Some links: (no gifs this time)

http://en.wikipedia.org/wiki/Supply_and_demand (ALWAYS remember that wikis can be easily changed by anyone and read carefully!)


http://www.netmba.com/econ/micro/supply-demand/


http://www.investopedia.com/university/economics/economics3.asp

http://hspm.sph.sc.edu/COURSES/ECON/SD/SD.html (interactive)

Very worthy of discussion, from Ellen:

>alright i have a question.. i was discussing this with a fellow classmate earlier and i was just >wondering if its possible to live without having economics involved. we were saying even if you >live out in the woods in a secluded area in a cardboard box you can't get away from economics >(assuming you aren't starving yourself) because if you go looking for berries or something, well >there is still supply and demand involved.. so is it possible?

Hmmm....

S & D info

Hey there -

Just some questions to get you thinking about S & D, and some links to more animated gif files.


1) Some people will pay a higher price for brand-name goods. For example, some people buy Rolls Royces and Rolex watches to impress others. Does knowingly paying higher prices for certain items just to be a “snob” violate the law of demand?

2) Predict what will be the direction of change for either supply or demand (and in what market) in the following situations:
a. Several new companies enter the home computer industry.
b. Consumers suddenly decide that large cars are unfashionable.
c. The US Surgeon General issues a report that tomatoes prevent colds.
d. Frost threatens to damage the coffee crop, and consumers expect the price to rise sharply in the future.
e. The price of tea falls. What is the effect on the coffee market?
f. The price of sugar rises. What is the effect on the coffee market?
g. Tobacco lobbyists convince Congress to remove the tax paid by sellers on each carton of cigarettes.
h. A new type of robot is invented that will pick peaches.
i. Nintendo anticipates that the future price of games will fall much lower than the current price.

3) When Exxon moved away from its location at the northeast corner of Wright and Green Streets, Shell, operating on the southwest corner of Wright and Green, promptly raised its prices. Is this coincidence? Explain.

4) Why are we relatively insensitive to price changes affecting low-priced goods such as bubble gum?



http://www.reffonomics.com/determinatesofsupply.html (determinants of supply)

http://www.reffonomics.com/supplydemandindifferent.html (shifting curves)



Have a nice weekend - sorry I freaked some of you out about the application questions - no worries, we'll talk about them next week. Enjoy your relatively homework-free (from me) weekend! :)



Ohh - almost forgot - if you feel I missed comments for the blog grading, zip me an email. I have a system now, and it's going to work great, but it was a little confusing setting it up, so I may have missed some people on accident. Remember - your comments should be meaningful and amazing! ha!

KM

Ha! Links!

Hey there -

On the sidebar, I posted links to everyone's blog (at least, everyone that's made a blog up). Your weekly posts/queries can go on anyone's blog. If you comment on an old post (meaning not the current week), please let me know by email or a note in the basket so that I can credit you with your comment. Remember, just saying "cool" isnt' enough - analysis is much better for your brain.

I'm almost done with the grading for the first 2 blog weeks - I think I have a system now. :) Updated grades will be posted by Monday at the latest - but more than likely tomorrow for you guys.

I'll also post some supply links and some discussion questions before I leave tomorrow.


KM

Interesting blogs!

There are some great posts out there from your peers (as I plow through the grading!). If you have time, you should go take a look at what some people have said!

Remember - if you leave comments on OLD posts, let me know so you can get credit for your comments. I'll read through current weeks, but I won't go back to old posts unless you leave a note in the basket or email me.

Economics of Sports

Just in case some of you are interested. :) There's a growing field in Econ now, dealing with the Econ of Sports. I took a seminar in it a few years ago - very interesting.

Before you read any of this (if you're interested) - which sport pays the highest: football, baseball, basketball, or hockey?

An article to think about:

http://www.econlib.org/LIBRARY/Columns/y2004/Sandersonsports.html


And a blog:
http://www.thesportseconomist.com/

And, if you really feel like reading college-level material, a professional article:
http://www.vanderbilt.edu/Econ/faculty/Vrooman/general.pdf


No, it's not really what we're on, although as it was pointed out, some of it is supply & demand. It's an interesting topic, though. Salaries are paid for a reason. :)

Monday Night -

News 3 out of Madison says we have a 2 hour delay tomorrow. More than likely, this means that 1st & 2nd hour won't meet - at least, that's what's happened in the past with late starts.

I can give 15-20 minutes in class to finalize info on your Food Court stuff. After that, we can have it due later in the week, but I can't give any more time. We need to get started on S & D, especially after losing today.

Super Bowl - interesting ideas on the commercials! I liked the slapping one, myself.

What about players? Why do football players (or any professional sports person, for that matter) get paid so much? and no, it has very little to do with supply & demand.

Hope y'all stayed warm - at least our car started. The truck decided it would rather be elsewhere and stayed in non-starting dream land. :)

Economics of the Super Bowl...

We're still really early in the semester, so there's not a lot of economic theory that we've talked about, but anyone want to give it a try?

I can start - why do businesses pay $3 million+ for a 30-second commercial that is never shown again other than during the Super Bowl?


~**~**~**~**~**~**~**~**~

So...will we have school tomorrow? It's supposed to be mighty cold...