- “Gregory Mankiw’s 10 Principles”
This week, we jump right in and talk about markets. You probably have a sense of what a market is, but what about economics? Watch this short video that highlights the Ten Principles, which are the core of economics.
What is (are) one (or two) principle(s) or topic(s) about economics that you want to learn more about and why?
- “Elasticity” Please respond to the following:
Gasoline prices drop again! Even with the expected increase in demand due to the 4th of July holiday, prices dropped again to the lowest level in about 12 years. Why? Partly because of the increase in the total world supply of oil and the U.S. expansion of shale and fracking production.
Read the following article from CNN: Gas prices are falling fast which helps explain this shift.
Is gasoline elastic, unitary elastic, or inelastic?
Choose one (1) of the following to discuss:
Find information online about the price of homes in your community. Are they going up, staying the same, or going down, and why? Is the demand for housing elastic, unitary elastic, or inelastic?
Automobile sales have been slower than in the past, with many companies offering rebates, discounts, and low financing. Find information online about why companies are lowering prices. Is the demand for automobiles elastic, unitary elastic, or inelastic?
- “Economic Profit vs. Accounting Profit”
In this video, Sal from Khan Academy explains how the economic concept of cost is different from accounting cost and why the difference is important to understanding what we mean by profit. In economics, we build opportunity cost — including ‘implicit costs’ — right into the supply curve.
After you view the video, think of the business you are currently in, or even dream about the business you would like to start. Identify/discuss the fixed costs, variable costs, and the implicit costs in that business.
4.Firms like Walmart, Target, and Kmart are often given as examples of competitors. Ironically, these firms are not what an economist would define as perfectly competitive firms.
Why are these firms not perfectly competitive?
What are the conditions that create perfect competition?
Name or describe an example of a perfectly competitive good or firm
- “Owning the Market”
In the lesson on oligopolies and monopolistic competition (The Whole Spectrum of the Market), Sal from Khan Academy creates a two-dimensional grid of the market types based on the number of competitors and the degree of product differentiation.
Identify one monopoly from which you buy a good or service.
Identify one oligopoly from which you buy a good or service.
Identify one monopolistic competitor that you buy a good or service from.
Share one effect you think these types of firms have on the quality of goods or services that you purchase. Is the quality affected positively or negatively? Provide a rationale for your answer.