Monthly Archives: November 2010

Linking Reading, Economic Concepts, and Class Activities

An economic concept that was shown in the self-interest reading was self-interest. Self-interest is when you make a decision that benefits you and others as well. According to Adam Smith, self-interest guides the producers to produce something that people wanted the most because this way they will make the most profit. If producers produce something that not a lot of people want, they will not make a lot of money. Also, if producers and sellers make decisions that satisfy the demand of the consumers, this would be the most beneficial to the consumers. This concept can be linked to the inn activity. The reason for this is that most of the decisions we as producers made were made to benefit ourselves. We kept a reasonable price so that we would be able to benefit ourselves the most and make the most profit. If we kept the price to low or high, we would either made no profit and a very low one and that would not have been very beneficial to us.

Another economic concept that was shown in the self- interest reading was modified market economy. This means that most decisions are made by buyers and sellers interacting in markets, although the government makes some decisions as well. This can be seen the sugar activity. In this activity, one of the news events states, “The U.S. government reduces the amount of sugar that U.S. companies may import. As a result, U.S. sugar consumers, such as candy companies, buy more sugar from U.S. sugar producers. In this example, one can see that the government made the economic decision. The government decided to reduce the amount of sugar that can be imported by U.S. sugar companies, so that more people will buy the sugar from local markets instead of foreign ones. This way the local markets in the country can make more money than the foreign ones.

One economic concept that was shown in the “Determining Prices” reading was market equilibrium. A market equilibrium occurs when the quantity supplied and quantity demanded for a product id the same at a particular price. This means that the consumers and producers are both satisfied because the demand and supply are both balanced. To reach the equilibrium, a certain amount of trial and error is needed. The producers need to keep changing their prices and play around with them to see which price the quantity demanded is the same at. This can be linked to the inn activity. This is because, for some groups, the quantity they supplied for the menus and the quantity that was demanded of the menus was the same. This meant that there was no shortage or surplus because the same amount of menus were demanded and supplied. This can also be linked to the sugar activity. After we received our news events, we were required to make supply and demand curves for this activity and then once again make them for the change that occurs in the event and find where the new equilibrium was. The equilibrium point shifted because either our demand curve or supply curve shifted, in our case the demand curve. This point, the equilibrium, showed us where the quantity demanded and the quantity supplied was the same for the news event.

Another economic concept that was shown in this reading was a shortage. A shortage exists when the quantity demanded is greater than the quantity supplied at the price that is offered. When this happens, it tells producers that they are charging too little for their products. They should raise the price so that the quantity demanded decreases, which in turn will steer them towards the equilibrium. This can be related to the inn activity that we did. In the inn activity, my group and I first charged 13 pence for Menu D. We supplied only one of this menu when a lot more demanded. This means we had a shortage because there was more quantity demand for the Menu than the quantity supplied. This told us to raise the price and we did, because we thought that this would decrease the demand and the quantity demanded and the quantity supplied would turn out to be the same and lead us to our equilibrium. o

The last economic concept that was shown in this reading was a surplus. A surplus is the opposite of a shortage. It occurs when the quantity supplied is greater than the quantity demanded at the price offered. This tells producers that the price for the product is too high and they should decrease the price to a price that is not to high or low but one that will still guarantees them a profit. This will increase the quantity demanded and steer them towards the equilibrium. This was also shown in the inn activity. Some groups decided to make a lot of the menus but when the votes came in, not many people demanded their menu. This led them have a surplus because not all of their menus were demanded so there were leftovers. The next time, the group lowered the price because they thought that there would be more demand and the shortage would be eliminated.

I chose the concepts self- interest and modified market economy from the self- interest reading because these two concepts were clearly shown in the article. They were explained in detail and so I felt that they were probably the most important concepts from that reading. I chose the concepts market equilibrium, surplus, and shortage from the determining prices reading because these three concepts were pretty much the only ones that were talked about. Also, at the top of the first page, it had these three concepts under economic dictionary so I felt that these were probably the most important if the reading put them there. Also every one of these concepts had a whole section explaining what it was which proved that they must be important.

Flow chart for Sugar

This is the flow chart for the market interaction between the news events. #1 (Market: sugar produced in the US, News Event: The U.S. government reduces the amount of sugar that U.S. companies may import. As a result, U.S. sugar consumers, such as candy companies, buy more sugar from U.S. sugar producers) is linked to 5 points.One point is #2 (Market: candy, News Event: Because of a federal policy designed to protect U.S. sugar producers, the price of sugar increases). These two are linked because if the US decreases sugar imports from other countries, candy companies have to buy their sugar from the US producers, and because there is so much demand for the sugar, the price can rise. #1 is also linked to #9 (Market: U.S. farmland, News Event: Higher crop prices and profits drive up rents on U.S. farmland. This is because, if the US decreases imports of sugar, the only option for people is to buy the sugar from the US producers and this causes the price to rise on the farmlands as well. #1 is also connected to #3 (Market: corn, News Event: Because of a federal policy supporting sugar prices, soft-drink bottlers use more high- fructose corn syrup as a substitute for sugar) because since the price of sugar has risen, the corn companies tries to find a cheaper substitute for sugar because they do not want to buy something expensive when substitutes are available. #3 is also linked to #8 (Market: soybeans produced in the United States, News Event: As higher sugar prices lead more U.S. farmers to grow sugar cane, sugar beets, and corn (for corn sweetener), the production of wheat and soybeans decreases). This is because since people are substituting corn for sugar, more farmers are growing corn because of the growing demand for it. #8 is also linked to #1 because of the same reason as before. Because the price of sugar is increasing, more farmers are growing other substitutes because of the growing demand for the cheaper substitutes. #1 is also linked to #4 (Market: sugar market in Caribbean countries, News Event: Because of legal quotas on sugar imported to the United States, sales of sugar to the United States decrease, and sugar producers in Caribbean countries reduce sugar production). This is because, if the US reduces sugar imports, it affects other countries such as the Caribbean that used to import to the United States. Now that they are not importing anymore, they need to reduce their production because the demand for sugar decreased. #4 is linked also to #6 (Market: marijuana in Caribbean countries
News Event: Because of reduced demand for sugar grown in the Caribbean, some sugar growers begin to grow marijuana to earn more income). Because the Caribbean has decreased its sugar production because the US no longer needs their imports, they need to find other ways of earning an income, and the farmers did this by starting to grow marijuana. #4 is also linked to #5 (Market: unskilled labor market in Caribbean countries,
News Event: Because of decreased sugar exports to the United States, sugar plantations lay off workers, and some sugar mills close). This is because, since the sugar imports and exports have decreased, the need for workers in the sugar mill have also decreased and for this reason, they have been laid off and in some cases, the sugar mills have completely closed down. Lastly, #5 is linked to #7 (Market: unskilled labor in the United States,
News Event: Because of lower sugar production in their countries, some Caribbean sugar plantation and sugar mill workers begin to immigrate illegally to the U.S. to find work). This are linked because since the workers in the Caribbean are getting fired, they need to find work in another place so that they can still earn an income, so they go to the US illegally hoping that they will find a job there.

My Dad’s Job- How can he increase his productivity and reduce his unit cost?

My dad exports and imports pearls. Since my dad does not produce the pearls and instead sells and buys them, there is no way that he can increase his productivity. Productivity is the increase in the quantity of goods that a resource that produce over a period of time and that is not the case for my dad.

Patterns and Trends of Past Assignments

Looking at my past assignments, I can see that I have improved a lot over the unit. However, sometimes I went down as well. At the beginning of the year, I got decent grades on my blogs. But after a while, my grades started to improve. They went from 8 on the rubric to 9 and pretty soon to 10s as well. I think that the reason that my grades were not very high before is because I did not have a very good understanding of the activities. However, the more activities we did, the better I understood them and was able to relate to them and so my grade started to go up as well. I did well on the in-class quiz or assignment, which required us to answer 4 questions which shows that I improved over the unit because I was able to summarize everything we had learned so far in that one assignment. I hope to keep improving throughout the year.

How and Why do People Make Decisions?

Now that we have been learning economics in class, I have a pretty good understanding of why and how people make decisions. Everyone makes decisions. Companies make decisions to gain the most profit, students make decisions that will benefit them most in school, and so on. People make decisions based on their best alternative. There are more than one option available for them to choose from so they need to choose which option is the best for them. To make a decision, it is very important to analyze the costs and benefits of each decision so that you can make a rational decision. This is called economic reasoning. One way someone can do this is by following the PACED decision making model. First is identifying the problem or the issue. Next are the alternatives, which are the other options you can consider. Next is criteria, which is when you decide which alternatives are more important that others and rank them accordingly. Next is evaluating the alternatives based on the criteria that was made. Last is making the final decision by calculating the net value of each alternative and seeing what option meets the criteria best.