Think of an example of a Public Good (not a publicly provided good, but a Public Good using the definition from the chapter.)  What are the costs of providing the good?  What are the benefits? Is there another way to have the good provided? Did this chapter cause you to think of Public Goods differently?  In what way?

Spending on national defense 

1. .)  What are the costs of providing the good? 

About one sixth of federal spending goes to national defense. CBO estimates the budgetary effects of legislation related to national security and assesses the cost effectiveness of current and proposed defense programs. Periodically, CBO produces reference volumes examining options for reducing budget deficits. The volumes include a wide range of options, derived from many sources, for reducing spending and increasing revenues. (Occasionally, the volumes focus on specific areas of the budget, as do many of CBO’s other reports.) For each option, CBO presents an estimate of its effects on the budget and a discussion of its pros and cons but makes no recommendations. Since 2007, federal debt held by the public has more than doubled in relation to the size of the economy, and it will keep growing significantly if the large annual budget deficits projected under current law come to pass. The Congress faces an array of policy choices as it confronts the challenges posed by such large and growing debt. To help inform lawmakers, the Congressional Budget Office periodically issues a compendium of policy options that would help reduce the deficit, reporting the estimated budgetary effects of those options and highlighting some arguments for and against them.

This report, the latest in the series, presents 121 options that would decrease federal spending or increase federal revenues over the next 10 years (see Summary Table below). Of those options, 112 are presented in the main body of the report, and most of those 112 would save $10 billion or more over that period. The remaining 9 options are presented in an appendix and would generally have smaller budgetary effects.

https://www.cbo.gov/publication/54667

• .)  What are the benefits? 

It would decrease federal spending and increase federal revenue over the next 10 years .

• )Is there another way to have the good provided?

No I do not believe another way to have this good provided.

• Did this chapter cause you to think of Public Goods differently?  In what way?

No because I research public goods and gives more in detail on what you want to know more about.

This is generally a very interesting chapter for everyone.  What is an  example of a negative externality that interests you?  Could the problem be solved via negotiation (Coase Theorem)?  Why or why not? Do you favor regulation to solve this externality?  Why or why not?  

Negative externalities occur when the consumption or production of a good causes a harmful effect to a third party. A negative externality that interests me is pollution, disposal of toxic wastes, various degradable and nondegradable wastes that pollute the worlds waterways.., If you produce chemicals and cause pollution as a side effect, then local fisherman will not be able to catch fish. This loss of income will be the negative externality.  Cocasian negotiation only works when the polluter and the person harmed from the pollution are easily identified and the harm is quantifiable. The polluter should actually pay the fisherman.

Back when Obama placed the tariff on Chinese tires I bought two set of tires — one before for daughter #1 and one after for daughter #2 – same tires for the same car. The second set was $200 more. That of course meant we didn’t spend that $200 elsewhere — on dinner and tip, on the local theater, somewhere. So someone was harmed. It’s just that that information is not in the data. That tariff cost about $1,000,000 per job to save 1200 jobs. Not particularly efficient. I expect similar results from these tariffs, perhaps worse because they are intermediate goods and not final goods, so cause more disruption to more markets. NYC was considering an office to regulate the adoption of technology – if too many jobs were likely to be destroyed then it would be banned . Things like self-check lines at grocery stores and self-service gas stations would be banned.

After reading these essays what do you think about protecting manufacturing industries from international trade? Who is benefitting from the tariffs on steel and aluminum?  Who is losing? Do you think more people will benefit than will lose? Why or why not?

Trade protectionism is a policy that protects domestic industries from unfair competition from foreign ones. The four primary tools are tariffs, subsidies, quotas and currency manipulation. Protectionism is a politically motivated defensive measure. It makes the country and its industries less competitive in international trade. Tax imports raises the price of imported goods.

 A 25% tariff on all imported steel was imposed and a 10% tariff on aluminum from the European Union, Canada and Mexico was also imposed. What is notable here is that these were our top trading partners and allies, and they were not happy with these additional tariffs.

Only a small fraction of the overall U.S economy was impacted by these tariffs. Trumps tariffs on wasing machines, solar panels, steel, aluminum, have covered only 4.1% Us. Imports. It is said that trump administrations new tariff was very poorly received. Almost 80 % of the 60 economists believed that the tariffs on steel and aluminum imports would actually harm the US  economy with the rest believing that the tariffs would have little to no effect. Economist thought that the tariffs would benefit the economy.

Look up the employment trends in manufacturing.  (Try the Bureau of Labor Statistics).  When did manufacturing employment reach its peak? How about manufacturing output?  Why do you believe manufacturing employment is declining while output increases?  

“Today’s manufacturing output is at least 5 percent greater than it was in 2000, but it has become much more capital intensive and much less labor intensive. Accordingly, workers in the sector are more likely to have at least some college education than their counterparts of years past. But there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980. These job losses have likely contributed to the declining labor force participation rate of prime age (between the ages of 21 and 55) U.S. workers. In “The transformation of manufacturing and the decline of U.S. employment,” (National Bureau of Economic Research, Working Paper 24468, March 2018), economists Kerwin Kofi Charles, Erik Hurst, and Mariel Schwartz examine the factors that have played a role in the decline of prime age manufacturing workers since 1980 and focusing in the 2000s.

Before examining the factors that have led to job losses, the authors discuss two periods that saw manufacturing employment fall sharply—1980 to 2000 and 2000 to 2017. Two million jobs were lost between 1980 and 2000 and 5.5 million jobs were lost between 2000 and 2017. The authors note that these losses have affected the employment rates of prime age workers, finding that a “10 percentage point decline in the local manufacturing share reduced local employment rates by 3.7 percentage points for prime age men and 2.7 percentage points for prime age women.”

https://www.bls.gov/opub/mlr/2018/beyond-bls/the-fall-of-employment-in-the-manufacturing-sector.htm

Microeconomics Chapter 8 Reflection

Give an example of a tax that you have paid in the past.  Pretend for a moment you are a member of the group considering imposing this tax (city council, state legislature, etc).  Give three reasons from the text to impose the tax.  Give three reasons not to impose it. What would the economic theory from this section of the course have to say about your tax? Will it raise much revenue? Will it change purchase decisions?

“U.S. Supreme Court Justice Oliver Wendell Holmes once said, “Taxes are the price we pay for a civilized society.” One can argue about the extent and quality of the civilization that we receive for our tax dollars, but it can’t be denied that we do pay a lot for it.

In fact, when every tax is tallied – federal, state and local income tax (corporate and individual); property tax; Social Security tax; sales tax; excise tax; and others – Americans spend 29.2 percent of our income in taxes each year.

There are many different kinds of taxes, most of which fall into a few basic categories: taxes on income, taxes on property, and taxes on goods and services.

Property tax, sometimes known as an ad valorem tax, is imposed on the value of real estate or other personal property. Property taxes are usually imposed by local governments and charged on a recurring basis. For example, homeowners will generally pay their real estate taxes either once a year or as a monthly fee as part of their mortgage payment.

In some countries property tax revenue can lag behind the growth of national income when the tax assessments fail to reflect changes in the general level of prices. It can also be costly to collect.

Why do we choose property to tax? we choose this because this can increase our monthly mortgage payment if you decide to escrow your property taxes. The tax is usually based on the value of the owned property, including land. Our local governing body will used the assessed taxes to fund water and sewer improvements and provide law enforcement, fire protection, education, road and highway constructions , libraries and other services that will benefit our community .Property is unique in that the amount is fixed. Other goods decrease in use when the tax is high.

Types of Taxes

1. Describe efficiency from the perspective of an economist.

Economic efficiency is the use of resources so as to maximize the production of goods and service.^] An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for society without using more resources. In absolute terms, a situation can be called economically efficient if:

• No one can be made better off without making someone else worse off (commonly referred to as Pareto efficiency).
• No additional output can be obtained without increasing the amount of inputs.
• Production proceeds at the lowest possible per-unit cost.

Economic efficiency is a term typically used in microeconomics when discussing product. Production of a unit of good is economically efficient when that unit of good is produced at the lowest possible cost. Economics by Parkin and Bade give a useful introduction to the difference between economic efficiency and technological efficiency:

• There are two concepts of efficiency: Technological efficiency occurs when it is not possible to increase output without increasing inputs. Economic efficiency occurs when the cost of producing a given output is as low as possible.

Technological efficiency is an engineering matter. Given what is technologically feasible, something can or cannot be done. Economic efficiency depends on the prices of the factors of production. Something that is technologically efficient may not be economically efficient. But something that is economically efficient is always technologically efficient.
A key point to understand is the idea that economic efficiency occurs “when the cost of producing a given output is as low as possible”. There’s a hidden assumption here, and that is the assumption that all else being equal. A change that lowers the quality of the good while at the same time lowers the cost of production does not increase economic efficiency. The concept of economic efficiency is only relevant when the quality of goods being produced is unchanged.

• Why are producer and consumer surpluses important in determining market equilibrium?

As the quantity of a good in the market increases, its marginal benefit decreases. As such, the consumer surplus for a given quantity declines as it approaches the actual market price and quantity. If a producer can “price discriminate, it can capture the entire economic surplus.

• Should market efficiency always be the goal of policy setters?  Why or why not? What might an alternative be?

I believe that market efficiency shouldn’t be a main goal of policy setters. The reason is that a policy looks great on paper but when set in to effect they hardly work. As they cause shortage or surpluses, because the policy will create ether price ceilings or floors. Either way the policy will not work as it looks on paper, and that is why I believe that policy setter shouldn’t make efficiency a main goal. 

How does this relate to the theories from the chapter?

This relates to the theories from the chapter because the Chavez government imposed a binding price ceiling on competitive markets, which caused a shortage of goods because at this price which was below equilibrium, the quantity demanded was greater than quantity supplied. 

Now consider a different case.  After Hurricane Katrina speculators brought in bottled water, but charged quite a lot for it.  What might have happened had price controls been imposed?  Where does the concept of fairness fit into this theory?

If price controls had been imposed, according to theory, there wouldn’t have been as much brought into the cities that needed it because people wouldn’t have had the incentives to bring it in, meaning quantity supplied would be less than quantity demanded, like discussed above.

When consumers become habitual purchasers of a product, the cross price elasticity of demand against rival products will decrease.

This makes demand less sensitive to price. The result is that firms may be able to charge a higher price, increase their total revenue and achieve higher profits.

Today i went to Lowes , and did find multiple items on sale such as washer, dryers and refrigerators. I did see that some of these items were on sale and some that were not on sale. If I had to do a better job with pricing and display I would leave the layout of refrigerators and washer and dryers. I would have them put from lowest to highest (Price) , then have my sales items in there own section.

Posted byPriscilla Rodriguez02/04/2021

Posted inUncategorizedEditMicroeconomics Chapter 4: Reflection

In many large cities you can now use your cell phone to call Uber or Lyft instead of hailing a taxi. Would you expect this to affect the prices of taxi medallions (that is really the supply of taxis)? Why or why not? Talk about supply and demand curves in your answer. As the demand for Uber/Lyft increases causing an increase in the market demand. Uber is more cost effective which will make the quantity increase causing a demand shift. Taxi supply is decreasing due to increase of price causing decrease in the demand curve. Their is more uber supply and the price might increase to increase of demand. the shift in supply curve will increase, while the taxi quantity will decrease causing supply curve to decrease. Taxi are not effective in cost and or in travel, uber are more available and easy access to them then taxi. Which makes the demand for uber more effective because it’s easier access and lower prices. Can you think of an example where you watched the supply of a good or service change rapidly? (For example, a new hotel or restaurant opened.) Based on the chapter what would you expect to see happen? Why? The Marijuana Industry moving into Rifle, Co. When it started, there were only one or two dispensaries in town. Then it grew to 3 or four in a three block radius. The prices were higher, but when the market became more competitive, the prices started coming in line with each other. which would be considered supply and demand.

How did AirBnB affect the supply of short term rentals in San Francisco?

“City officials across the globe have sought to minimize Airbnb’s impact on tight housing supplies and rental costs, sparking legal fights with the company, which has argued that, as an Internet platform, it is not responsible for the listings on its website.

As part of the settlement with San Francisco, where Airbnb is headquartered, the company will create a registration system requiring that anyone in the city who wants to rent room or house on Airbnb must first supply their name, address and zip code, said Airbnb global policy chief Chris Lehane. Only after registering can hosts list their homes for rent.

“Every host on the Airbnb platform will be registered, which is what the city has said it will be looking for,” Lehane said.”

https://www.reuters.com/article/us-airbnb-sanfrancisco-settlement-idUSKBN17X254

1. What in this chapter made you think about an economic concept differently than your previous beliefs?  

In chapter 1 pg4 : 1-1a : People face trade-offs “ you may have heard the old saying , “ there isn’t no such thing as a free lunch” The concept of this is if you think you are getting something for free, you’re probably paying for it through hidden costs . In this chapter I felt like microeconomics involves people and their behavior.

• What new questions do you have now about the US economy based on this chapter?

How the economy works as a whole?

• If you already took Macroeconomics, what is your strongest memory from the material you covered in that class? 

 I learned a lot from Macroeconomics. For example, the equilibrium and the opportunity cost. Those two really stuck with me.

                                                    

1. It is certainly true that some people have lost jobs due to increases in international trade.  It is also true that some people have lost jobs due to changes in technology.  Should we treat those two causes differently? Why or why not?

It has been said that increased productivity can lead employers to eliminate millions of manufacturing jobs. I personally do not think there is a different in either. It is hard to say because people do lose their jobs when it comes to technology. There are machines that are now made with technology and run only on technology with a few people operating them.

2. How important is production efficiency to sustainability?  How is trade related to efficiency?  (This question is really for the many sustainability students in this class. :^)) 

Sustainable Consumption and production is about advertising or promoting resource and energy efficiency. Eco-efficiency applies to all business aspects, from purchasing and production to marketing and distribution. It is our future and requires of us in order to insure a stable or sustainable development.