Tuesday, December 18, 2012

Topic 17: Tragedy of the Commons Experiment


Consider the fishing game we did in class last week and write about your experience. Use the questions below to guide your writing. Due Monday, Dec. 24.
  1. Did anyone at your lake take too many fish?  How did that make you feel?  Did everyone try to take as many as possible? Why or Why not?  Does society reward those with the “most”?
  2. Did anyone sacrifice the number of fish he or she took for the good of the community?  Why or why not?  Does society ever reward that type of person?
  3. How did your strategy change in game 2 (if at all)? Does it make a difference to know what the rewards are?
  4. Is it possible to maximize the number of fish caught per person as well as the number of fish remaining in the pond at the same time?Why or Why not?
  5. Think of a local commons that you are familiar with (a park, sidewalk, or the sofa area or cafeteria at PAS) Do similar situations arise? Explain. HOW might those problems be solved?
  6. What are some natural resources that are common resources?
  7. What are the global commons? Are these being used wisely? Why or why not?
  8. What can people do to use these resources most wisely?
  1. The people in my group all tried to take as many fish as possible. When I saw someone else taking a large amount of fish, I automatically tried to take as many fish as possible as well in order to "not lose". People had a feeling of competitiveness, and think that if we don't take the fish, someone else will, so why not just take it? At first, society rewards those with the most fish, but later on, when the resource depletes, everyone will die.
  2. Later on during the experiment, when we found out that the resource was being depleted, some people did release some fish back into the lake. They did so because they remembered that they shouldn't deplete the resources now, or else there will be no available resources in the future and everyone will starve. However, society doesn't reward them, and some other fisherman even wanted to fish for the ones released back into the lake.
  3. Our strategies in the 2nd round completely changed. Everyone followed the agreed rules and fished only a certain amount. Because of this, we had an ample amount of remaining fish. It does make a difference, and a big one at that, to know that the reward would be to have fish available for the coming years.
  4. It is possible to maximize the number of fish caught per person as well as the number of fish remaining by creating a formula and calculating how many fish can be caught and how many must remain in order for enough to be available in the future.
  5. When I think about some of the local commons, such as parks, sidewalks, sofa area, or cafeteria, I cannot think of similar situations, since these areas cannot be used "too many time", and the resources don't exhaust as they are being used.
  6. Some common natural resources include food supplies such as fish.
  7. As said before, fish is global common because people anywhere, as long as they are on the cost, can fish and use these resources. Currently, the global community do face these problems and these resources aren't being used wisely. However, there are regulations now to help solve this problem.
  8. To use resources most wisely, there must be regulations.


Sunday, December 16, 2012

Topic 16: Game Theory and Chicken

This week we experimented with game theory using "The Prisoner's Dilemma." We found that the equilibrium (the Nash Equilibrium) occurs when each player acts in his/her own best interest no matter what the other does. As we found, this always ends up in a "bad" result. Considering the video clip and what Nash says about Adam Smith, and considering the results of our experiment, comment on your thoughts and feelings about how people behave in competitive situations.

  • Game theory assumes that people make rational decisions. Do you think that assumption is valid?
  • Do you think that the "bad" outcome is always inevitable? Why or why not?
  • Under what circumstances might a better outcome occur (think of what Nash says in the video)?

  • Game theory's assumption that people make rational decisions is mostly true. However, there are two cases where this is not the case. The first one is when people are emotional. Scientific studies have proved that the limbic system may sometimes overcome our rational brain, and thus result in irrational and impulsive decisions and actions. The other case is when people are uninformed. When people do not know all information pertaining to something, then they cannot make the best and most rational choice.
  • The "bad" outcome is inevitable unless during exceptions such as when people make mistakes or during accidents (and they get lucky and stumble upon the best outcome for them). We assume that people always make rational decision; because of this, they always choose the action that's best for them. And these actions are always one of the "bad" outcomes due to the Nash equilibrium (people choose the dominant strategy).
  • As mentioned above, a better outcome might be accidental, when people make mistakes, or when accidents happen and something out of human being's control happens. Another way for a better outcome to happen is, as Nash said, for people to communicate and cooperate so that they all get the best out of what is available.

Monday, December 3, 2012

Topic 15: What is a Monopoly?


After watching the video "What is a Monopoly," respond to the questions below:
1. What are the three main characteristics that make a firm a monopoly?
2. How does a monopoly firm decide how much to produce and what price to charge?
3. What are the costs and benefits of monopoly to the monopolist firm and to society?
4. In the video, one commentator mentions some of the problems with monopolies, but he says that those aren't what economists are concerned with. What are the problems he is referring to? If economists are not concerned with those problems, what are they concerned about? Do you agree with their concerns?
5. Monopolies are often looked at as bad. Can they also be good? Under what circumstances could a monopoly be a good thing?
6. Given that in the long run monopolists spend all of their surplus in maintaining their monopoly position, do you think it is worth it to try to attain a monopoly? Why or why not?
  1. The three main characteristics that main a firm a monopoly are that there is only one firm in the market, the product is unique and there are no substitutes for it, and there are barriers to entry for the market.
  2. Monopoly decides how much to produce by choosing the quantity where marginal cost equals to marginal revenue, and it decides how to charge its product by charging the highest price that people are willing to pay on the market demand curve for the good.
  3. The costs of monopolies are that a deadweight loss arises when the monopoly is not completely efficient. The benefits of monopolies are that monopolies encourage innovation and research (since there are patents), and society can enjoy cheaper prices since only one firm supplies a product, and a larger quantity supplied means that average total cost is spread out, lowering the costs.
  4. The problem that the economists are not concerned with is the transferring of income from consumers to monopolists, and that in competitive markets, prices will be lower and quantity produced will be higher. The economists are concerned with the inefficiency and efficiency of monopolies, and whether or not deadweight lost arises. If talking about fairness, then I do not agree with the economist's concern about efficiency. However, if talking about productivity and the use of resources, then yes, I do agree with the economists view for efficient monopolies.
  5. Monopolies can be considered good because if the average cost is decreasing, then there are advantages to large scale manufacturing and production.
  6. If, in the long run, a monopoly spends all of its surplus to maintain its position, then it is not worth it to attain a monopoly because it would mean that a lot of resources that could be used for other things would be wasted and not properly distributed between the consumers and the producers, which is a huge opportunity cost.

Wednesday, November 14, 2012

Topic 14: Productivity Experiment

Please write about the in-class experiment you performed by producing widgets (those paper rings). In it please describe the experiment and your role in it. Write about what went well and where problems came up, keeping in mind concepts like the law of diminishing returns (both for labor and capitol), capital accumulation (especially in terms of human capital), and division of labor and specialization. Did things go the way you would have expected in terms of these concepts? If not, why do you think that was so? What were the surprises, if any? What do you think the "company" could do in the short-run to improve productivity? What about the long-run? How close do you think this experiment came to approximating a real-life situation?

  • The experiment was to test how the number of laborers and capital varies and influences that amount of product produces, and what the costs were. These are determined and described with marginal product and marginal cost. My role in this experiment was the last laborer to be added, the twelfth laborer. There were many problems in this experiment. It went well when there was only one worker. However, when more and more workers were added, the cooperation between these workers was very ineffective and inefficient. Our curve was very strange. The marginal product was increasing and then decreasing in the first few work days, but later on it gradually increased, even if it is slightly. However, diminishing returns was still illustrated. Once again, the experiment didn't go as we had expected in terms of concepts such as the law of diminishing returns, capital accumulation, and division of labor and specialization. The reason was mainly because of "technical issues", or capital problems, and because there wasn't an effective and efficient system of division of labor and specialization. The surprise was that the quality of the products was very bad because of the insufficient time in the work day. To improve productivity in the short-run, the firm should allocate one day to dividing and specializing labor. To improve productivity in the long-run, the firm should increase capital such as scissors and staplers, since there was too much labor capital and the technological capital could not be distributed evenly. This experiment, I believe, is quite far from approaching a real-life situation.

Tuesday, November 6, 2012

Topic 13: The Return of the Zeppelin

Watch the video (a required assignment, so be sure to click "submit" after you watch it) "The Return Of Zeppelin." After watching it, you should also watch a clip of the Hindenberg disaster. There are many on YouTube. Here is a link to one: http://youtu.be/F54rqDh2mWA.

When you have watched the videos, write about the following:
  • Discuss the determinants of demand and supply, and which of these determinants apply to the success of Zeppelin and to Airship Ventures. 
  • Discuss the role technology has played in the return of the Zeppelin. Review the different market structures (perfect competition, monopolistic competition, oligopoly, and so on) to identify which market structure best describes Zeppelin and which best describes Airship Ventures. 
  • List three determinants, or variables, of demand and explain how changes in those determinants could result in the continued success of Airship Ventures.
  • Finally, express your thoughts on airship travel. Do you think it is a good idea? Under what circumstances would you want to try it, if ever?
  • The determinants of demand include change in consumer tastes, change in the number of buyers, change in consumer incomes, change in the prices of complementary and substitute goods,  and change in consumer expectations. The determinants of supply include change in input prices, change in technology, change in taxes and subsidies, change in the prices of other goods, change in producer expectations, and change in the number of suppliers. The most major determinants that apply to the success of Zeppelin and Airship Ventures include change in consumer tastes, change in technology, and change in number of suppliers.
  • Technology is the major force that changed consumer preferences. Now that Zeppelins are safer and more advanced, more consumers are turning to Zeppelins as an option of transportation. I believe that the best market structure to identify Zeppelin is monopoly, and the best market structure to identify Airship Ventures is oligopoly.
  • Three determinants, or variables, of demand that can result in the continued success of Airship Ventures include change in consumer tastes, change in technology, and change in input prices. If consumer tastes start to incline toward Zeppelin, then Airship Ventures will be able to increase their sales and profit. Advanced in technology would further change consumer tastes and also help decrease certain costs. Decreases in input prices means that Airship Ventures will be more efficient and will earn more profit.
  • Yes, I believe airship travel is a good idea, especially for industries such as tourism. I would like to try airship travel in a small area, where the sky is clear and the view is magnificent.



Tuesday, October 23, 2012

Topic 12: Pizza for Pesos?

For this journal entry, watch the video "Pizza for Pesos" (watching this video has been assigned as a homework assignment, so be sure to click on the "submit" button after you watch it so that you can get credit). After watching the video, comment on it in your journal. In your writing, consider the following questions:
  • How does the story in the video relate to the idea of utility?
  • How does it relate to the concept of consumer preference?
  • What affect do you think a change in the exchange rate between Mexican Pesos and U.S. Dollars would have on Pizza PatrĂ³n's business? How would it affect the budget lines of its customers? (currently the exchange rate is 12.97 pesos to the dollar).
  • What do you think about the arguments against accepting pesos? How are these arguments related to our previous discussions regarding international trade?



  • The story in the video relates to the idea of utility because one, the pizza chain consumers have to consider whether buying pizzas in pesos will increase their utility or not - when they buy pizzas with pesos, do they feel like they gain? How does it compare to the consumers buying with regular American dollar?
  • The story in the video relates to the idea of consumer preference because it has to do with whether they prefer paying with pesos or the American dollar. Some people, who have a few extra pesos left, maybe from a trip to Mexico, may prefer pesos over the American dollar because they want to get rid of the extra peso change they have. For people who prefer to buy pizzas using the American dollar, then it doesn't matter that much to them, so their preferences and utility are not influenced.
  • The exchange rate plays an important role because it may influence whether the consumer has to pay a higher fee or not, and it may cause some disputes. If the peso value increases, then the budget line for customers using the pesos will increase. If the peso value decreases, then the budget line for customers using the pesos will decrease.
  • I believe that the argument accepting pesos is a good one, and quite valid as well. These arguments relate to our previous discussions regarding international trade because it has to do with the country prices and world prices.

Friday, October 19, 2012

Topic 11: Brand Names and Utility

Consider the definition of utility: The benefit or satisfaction that a person gets from the consumption of goods and services.

After watching the video, "No Frills Grocery Shopping," write about the effect that brand names have on utility, or sense of satisfaction, that you receive when consuming goods or services. For example, how does your demand curve differ for various products (quantity demanded at different price levels) when comparing brand-name products and no-name or generic products? All things being equal (ceteris paribus), such as quality, durability, and so on, do you think a product having a brand name brings you more utility? If so, how does it do so? If not, why not? Provide specific examples of products that you feel must be brand name for you get get the most utility from, as well as products for which a brand name is not important.

  • Brand names have an effect on utility because it affects the limbic system, or the emotional part of the brain, to a certain degree. Brand names provide people a feeling of belonging to a cool or identified group of people who also buy that item. For example, if a product is advertised by an idol, then the person who buys the product may feel as if they are as superior as that idol. The product is automatically associated with coolness.
  • My demand curve for brand name products does differ from my demand curve for no name products. This is because brand name products are more elastic, more responsive to price. To me, they are luxuries, so I can forgo these products for other products that are necessities.
  • As I as in the above paragraphs, buying brand name products gives people a sense, a feeling of belonging. This is the same for me. A very good example would be clothing and other accessories such as bags and shoes; these are the things that would be compared and shown to peers and other social groups. By buying the same type of clothes, I get a strong sense of utility because I belong and have something to talk about with my friends. A product in which a brand name is not important is water - it doesn't matter the type of water I drink as long as it's water.

Tuesday, October 16, 2012

Topic 10: Consumer Preference and Utility - Skechers

For Journal topic 10, watch the video "Skechers" and then answer the following questions:
*How does Skechers assess consumer preferences (utility) in their target market, ages 12-24?
*What advertising strategies does Skechers use to promote their product?
*What innovations in footwear have Skechers carried out that differentiates them from the competition?
*In monopolistic competition, firms differentiate themselves through location. What geographical locations did Skechers consider for their target market? Discuss reasons for choosing these geographic locations.
*Do you think the kind of strategies used by Skechers would work to influence your preferences (utility) for shoes, clothing, or other products? Why or why not?
*What products do you feel have a high utility for you? What makes them have that level of utility?
*Are there any products that seem to generally have a high level of utility among other people that you don't feel are valuable? In other words, what products seem to have an appeal to others that you just don't understand?

  • Skechers asses consumer preferences (utility) in their target market through market research in houses, and also groups of their target market globally. They also gain information about their consumers when their consumers seek information: what type of information they seek, and where they seek it.
  • There are four methods to promote products: personal selling (through salesman), sales promotion (temporary period of discounts), public relations (publicity), and advertising (through any media, etc.). Products are also promoted by focusing on a target market (a specific group of customers), which is done by market segmentation. It creates a message and a brand identity.
  • The innovations in footwear in Skechers comes from the younger group of employees that participate in the lifestyle of their target group and are on top of the lifestyle trends. They are able to bring to Skechers first hand what is popular in the market and what type of products should they promote.
  • The geographic locations that Skechers consider for their target markets includes in style, trendy areas such as downtown, where their target market, the younger population, can actually see the product and consider it. Skechers also have a presence in retailers in large cities all over the world to promote their product globally.
  • Yes, I believe that the strategies Skechers uses will be able to influence my preferences because I like the image of a cool, trendy lifestyle.
  • The products that have a high utility for me are products that I will actually use, such as stationary. Only a few, very eye catching luxury products will have a high utility for me because for me, even if I have these products, they aren't going to help me much in my life.
  • Some products that seem to have an appeal to others that I just don't understand is coffee. Many people need coffee, either for its waking properties or its taste. However, I do not like the taste of coffee, and I usually have other methods for keeping myself awake.

Saturday, October 13, 2012

Topic 9: The Myth of Outsourcing's Effect

Watch the economics video Myth: Outsourcing Is Bad for America, then write about how globalization and the economic concept of comparative advantage relate to the practice of outsourcing. In your entry, you should consider the following questions:
  • What are globalization, comparative advantage and outsourcing?
  • How do globalization and the economic concept of comparative advantage relate to the practice of outsourcing?
  • What are the characteristics of an open economy?
  • How do production and efficiency relate to outsourcing?
  • How do production costs and pricing differ with and without the implementation of outsourcing?
  • How does outsourcing relate to the concept of opportunity costs?
  • What are the potential differences in the levels of marginal product of labor with and without outsourcing?
  • Globalization, in the economic point of view, is the interdependent world economy. Comparative advantage is when one entity (individual or firm, etc.) is able to produce a product or service with less marginal cost compared to others. Outsourcing is any task, operation, job, or process that could be performed by employees within an organization, but is instead contracted to a third party that is usually significantly cheaper for a significant period of time.
  • Because some countries have comparative advantage pertaining to labor (cheaper labor), many industries will want to get access to this group of labor. Combined with globalization, these industries are actually able to move their factories to these countries with comparative advantages, thus resulting in outsourcing.
  • The characteristics of an open economy include economic activities between domestic community and outside people (and businesses), the ability of people to trade goods and services with other people and businesses in the international community, and the flowing of funds as investment across borders.
  • Production and efficiency relate to outsourcing because they are the main reasons why companies and industries outsource: to increase production and maximize efficiency.
  • Without the implementation of outsourcing, both the production cost and pricing of the good or service would be higher because of the higher cost of labor. With the implementation of outsourcing, production cost and pricing would both be reduced.
  • Outsourcing has many opportunity costs, like any other act of decision, and one of the most controversial opportunity cost is the increase in unemployment within the country that is outsourcing.
  • The potential differences in the levels of marginal product of labor with and without outsourcing is that without outsourcing, the marginal product of labor is lower than when there is outsourcing.

Tuesday, October 9, 2012

Topic 8: Debate on Globalization

Watch the video "Debate on Globalization" and answer the following questions:
  1. Discuss how "catch-up" (convergence) ties in with globalization in China and India.
  2. Define Globalization and discuss the benefits and costs of globalization.
In addition, write about how globalization has affected your life. How would your life be different in a world without globalization? How has Taiwan in particular been affected, and how has that changed your life and the lives of people you know?
  • Advocates of globalization says that through increased employment and technological advances, many developing nations such as China and India have been able to catch-up with the developed nations much faster in terms of living standards and economic activity. For example, usually, it should have taken two generations for a developing nation to double its standard of living, but now, for China, it takes only years for living standards to double.
  • Globalization in the economic point of view is the interdependent world economy. It is the process of different countries and people interacting with each other as sellers, buyers, or intermediates. The benefits of globalization, other than help developing nations catch-up, also allows technological advances, liberalization of policies, and increased consumer choices due to increased competitiveness. However, when one benefits and gains, it costs another person and this person loses. The costs of globalization includes the problems of using low cost employees without giving them a minimum standard of working conditions, the displacement of a nation's own workforce, and the interference of economy on politics and national sovereignty.
  • Globalization affect my life by allowing me more choices, and provides me insight on which products have a higher marginal social benefit compared to its marginal social cost. Without globalization, I would loose access to products that are only available in other countries. Without globalization, Taiwan would not have a market to sell its specialized microchip products and cause its economy to slow down. On the other hand, globalization has provided Taiwan with a market.

Friday, October 5, 2012

Topic 7: Government Farm Subsidies

  After watching the video "Government Should Leave Farm Business," write down your thoughts about how government subsidies work. The producers of the video take a particular point-of-view about the issue. What is their point of view? Do you agree with it? What about other kinds of subsidies? Are there situations in which some kinds of businesses should be supported by taxpayer money, or should the market be left completely free and subject only to the laws of supply and demand? Can you think of any industry that needs to be supported? What about education? Most colleges and universities, including private ones, receive many benefits (not only money) from the government. Should those supports remain, or be removed? What about for elementary and high school? Should people who don't have school-aged children have to pay taxes to support schools?

  • Government subsidies reduces the price of the farm products because the supply of the product increases now that the farms have received extra money. However, the video takes the practical side of the issue: the side of the poor. It points out the idea that these tax subsidies rarely every go to the poor people who need these subsidies in reality. And I do agree with it. The subsidies that were provided to prevent farmers from becoming poor ironically didn't benefit the poor, but only made the wealthy richer.
  • I believe that businesses such as infrastructure should be supported by taxpayer money. Infrastructure is essential to a nation or to a society, and is used by the majority of the public, common people; therefore, this business should be supported by taxpayer money. This may apply to food products as well (not just limited to farm products). Other markets, such as clothes and technological appliances, should be left alone and controlled by the laws of supply and demand.
  • I believe that education should be supported by the government. Currently, education is becoming more and more expensive, and many can't pay for it. Government subsidies will help these poor people who want or need to get a college education by taking away the burden of money. This also applies to elementary and high school, since they are obligations for the parents.

Tuesday, October 2, 2012

Topic 6: Opportunity Cost of a College Education

After watching the video “The Economics of Higher Education,” answer the following questions:

  • What is marginal analysis and how is it used in making good decisions?
  • What are the marginal costs and marginal benefits of one more year of higher education?
  • Evaluate the argument that college graduates earn $1 million more in their working lives than non-graduates. Is this accurate? Why or why not?
  • Using marginal analysis, explain why some students leave college after one year.
  • How does the information in the video relate to what you have been told by parents and other about going to college? Did watching the video change your mind in any way about getting a college education? If so, how did your thinking change. If not, why do you think that is so?

  • Marginal analysis is the idea that when consumers make decisions, they make decisions about the next unit of something. It is used in making good decisions because it helps you weigh the pros and cons, the cost and benefits, of an action or behavior. It helps us make rational decisions instead of rash decisions so that we can make sure that the marginal benefit exceeds the marginal cost and not the other way around.
  • The marginal costs of one more year of higher education, the opportunity cost, includes money and time. To go to one more year or higher education, you have to pay the tuition fees and any other expense needed. Time is taken into account because you could have been using this time to do other things, such as working to earn money, instead of spending the time learning and not earning a solid income. On the other hand, the marginal benefits may be the social connections and pleasure time, as well as a likely increase in future job pay.
  • The argument that college graduates earn $1 million more in their working lives than non-graduates is very misleading and inaccurate. The statistics of college graduate earnings have been skewed because of a few individuals who are "super earners" who earn a very large amount of money that exceeds that of the average population. Also, there has been research stating that these college graduates would have done as well as they had even if they didn't go to college, which is also known as the selection effect: those who self-select to go into college are already predicted to earn more money.
  • Some student leave college after one year because, by using marginal analysis (may without thinking), these students decided that the marginal benefit of going to college is less than the marginal cost of going to college: the marginal cost outweighs the marginal benefit. Therefore, they drop out. Some of these marginal costs include the time wasted so that people couldn't get a job and start earning money, as well as the tuition fees that have been increasing exponentially through the centuries.
  • The information in the video confirms what my parents and I believed in. We believed that it is not necessary to go to college, and instead, going to work would be more practical. Therefore, this video doesn't change my mind in anyway about getting a college education. After all, we go to college to get a decent job, so we now know that going to college can't get you a decent job, why go?

Tuesday, September 25, 2012

Topic 5: Ripple Effects and Elasticity

One of the fundamental economic ideas is that choices have secondary, or "ripple" effects. Imagine throwing a stone into a still pond. The primary effect is the splash it makes, but it also sends out ripples that spread out over the surface of the pond which bounce off of other objects making further ripples. The ripples going in different directions and bump into each other, creating patterns that are difficult to predict. For this journal entry, watch the video "The Ripple Effects of Oil Prices," then write about how the ripple effects of a change (up or down) in the price of oil affects the various markets that make up the economy. How does it affect you and your family? At first you might think, "Not at all," but when you think about it more deeply, it is clear that because of oil's importance in the production of every good and service that is produced, a change in its price effects everyone (albeit differently). What other goods and services can you think of that have such an inter-connectedness with other goods and services? How does the idea of elasticity affect the markets when prices change? For which goods and services is your own demand relatively elastic? Inelastic? Why?

  • When the price of oil changes and either increases of decreases, products that use oil to work and processes such as manufacturing are effected. For the products that use oil to work, they are complements to oil, so if the price of oil increases, the price of these products will also increase.  Some examples of complements include vehicles such as cars and motorbikes. The total price of the processes such as manufacturing may also increase because many small parts in manufacturing require oil.
  • My family and I are effected by the change in oil price because we must pay more for oil, meaning that our transportation fees and costs will increase. This may lower our demand for oil and force us to choose other means of transportation that either doesn't need oil, or could lower the oil expenses of the family.
  • Another good and service that may effect others so much may be wood. Many products, such as paper and materials for construction, are made from wood. Even though we have other substitutes for paper and materials for construction, these are still the primary form of material used (paper for books and posters and newspapers, etc.).
  • Elasticity affects the marketing by describing the changes of quantity in ratio to price. Inelastic means that no matter what the price is for a product, the demand is the same. An example of this may be medication. No matter the price of medication, if I'm sick, then I will definitely get medicine to make myself recover. Elastic means that no matter what the quantity is for a product, the demand is the same. I do not have any demand for totally elastic goods in real life. Even though this is possible in theory, it's hard to find totally elastic goods in real life.

Wednesday, September 19, 2012

Topic 4: Where Choices Lead

A number of very specific choices have led you to be in this particular class in this particular school. Each choice represents not only what was gained, but what was foregone in order to get you here. What was forgone is defined as the opportunity cost of what was gained. In your opinion, what have been some of the opportunity costs of getting you into PAS in general and this class in particular? Keep in mind that money is only one kind of cost--there are many more things that make up opportunity cost, both tangible and intangible. Considering that you most likely had little control over many of the decisions that got you here, do you think the decisions that were made were rational? In other words, if you analyze the costs and benefits, do the benefits outweigh the costs? Why or why not? If you had been in total control of your life, would you have made the same decisions? Explain.

  • Some of the opportunity costs of getting myself into PAS in general include me giving up the choice of other schools (which may or may not be local schools), the money that was spent so that I can enroll in this school, and the time that I must give up in order to go to PAS (this one can also apply to when I go to other schools). Some of the opportunity costs of getting myself into AP Microeconomics class may be other classes that I could have taken, or the time that I have to spent to go to this class (I could be doing my work in a study hall period).
  • I believe that the decisions I made were rational, because these decisions are the best in my opinion and preference. Coming to PAS, though it's very expensive, will be able to help me get into a good college and help my future better. The benefits exceed the cost because I will be able to earn the money spent back if I have a higher degree of education. Taking AP Microeconomics is also a rational choice because even though I must give up another class, this subject is the one that will mostly likely help me the most in the future, both in college and in the work environment. If I had been in total control of my life, I would most likely make the same decisions; I will make the decision to come to PAS because it opens up opportunities, and taking AP Microeconomics was my own choice in the first place.

Tuesday, September 18, 2012

Topic 3: Incentives to Attend School

We have talked about the incentive (benefits) and disincentives (costs) in class. After watching the video "Incentives for Perfect Attendance", think about how schools attempt to get students to go to school. What are some of the incentives schools use? What about disincentives? Which do you think are stronger incentives for getting students to attend school, rewards or punishments? Why do you think so? What about at your own school? What kind of incentives do you have to attend school? Are these incentives effective? Did your behavior or that of other students change because of the incentives given at PAS? Why or why not? What do you think is the goal of the schools in the video? Is it the same as the goal at PAS? Why do you think the incentives used by the schools in the videos are so different from the incentives used at PAS?

  • Some incentives that schools use to motivate students to go to school includes academic and physical rewards. Academic rewards are generally talking about a higher grade, or better standardized test scores. Attendance also contributes to participation grades in class. Physical rewards may be prizes such as laptop computers and cars (which is the example used in the video "Incentives for Perfect Attendance". Disincentives may be when the student has better alternatives such as a stable job, or the need to be somewhere else, such as finding work to support his or her family. Stronger incentives for school are definitely rewards. As in psychology, punishments usually create negative emotions and negative feedback, and sometimes they may backfire and result in a decrease in school attendance.
  • For my own school, our incentives to attend is mainly self-motivated; we want our academics to be strong so that we can get into a good college. This incentive is pretty effective for a society like Taiwan, because many Taiwanese students believe that education is very important and values education a lot. If there are punishments such as missing days in our curriculum, our behaviors usually change because we care about it.
  • The goals of the schools in the video is to get good school attendance so that the schools can get federal funding from the national government. This is a different goal for PAS because PAS is a private school and it wants its students to get into good colleges and universities instead of getting funds from the government.

Thursday, September 13, 2012

Topic 2: Scarcity at School?

As we have learned, scarcity is an economic fact of life. We always want more than we can get with our given resources. This forces us to make trade-offs; we give up one thing in order to get another. This is true in every type of society, including that of our school. Write about some examples of scarcity that the different entities at PAS encounter (students, teachers, office staff, and so on), then write about what those entities have to give up in order to get what they want. Finally, write about your own experiences with scarcity at PAS. What are the resources that you want more of? What keeps you from getting all that you want? What are some examples of some trade-offs that you have had to make?
  • One of the examples of scarcity that the different entities at PAS encounter may be time. People do not have enough time to do what they must do. For example, during the breaks, many students do not have enough time to do the multiple things that they want to do, such as going to their lockers or going to the bathroom. When the students choose to do one of the two, they must give up the other (this is a trade off, and the second most desired option that the student chooses not to do is the opportunity cost. Sometimes, teachers and staff also face this trade off and the opportunity costs; they have to decide whether they want to do one thing or the other.
  • Some of the scarcity that I face at PAS includes the example mentioned above: not enough time to go to places where I want to go, such as my locker and the bathroom. Another scarcity that I face is that I cannot choose to take all the classes that I want to take because my class schedule is limited, and those classes sometimes clash with each other. I must make tradeoffs: if I want to pick one class, then I lose the opportunity to take another class.

Monday, September 10, 2012

Topic 1: The Big Questions

  Michael Parkin, the author of our textbook, asserts that there are two big questions in economics. The first is “How do choices end up determining whathow, and for whom goods and services get produced?” If you think about PAS as an economy, and everyone at PAS as both a producer and consumer, what is the “what”? In other words, what goods and services are produced? Who produces those goods and services? How are those goods and services produced? For whom are those goods and services produced? Who makes the choices governing whathow, and for whom goods and services get produced?
  The second big questions is “When do choices made in the pursuit of self-interest also promote the social interest?” In your opinion, in what way to the choices made at PAS about what, how, and for whom reflect different people’s self-interest? In what way, if any, do they reflect the social interest?

  • The goods and services produced in the PAS economy are educated persons. In other words, us, the PAS students. How are these goods and services produced? The answer is through our teachers. Our teachers are the ones who educate us, and therefore, the ones who "manufacture" us. For whom are these goods and services produced? This question has two answers, one specific, one broad. The specific answer is our parents. Our parents are the one who "ordered" for educated children, or products. On the broader scale, we are the goods and services that will eventually be let out onto the "market" of educated, high human capital labor. The person who makes the choices governing these questions is of course our Head of School, Mrs. Pamela.
  • When PAS make choices such as creating a student council, it is reflecting people's self-interests because having a student council will help the students voice their opinions. Also, the student council plans events that people want, which is self-interest. When PAS create rules such as the late policy, social interest is reflected because this is for the good of the society in general: the school wants to drill the concept of being on time into people's minds.