Sunday, December 05, 2010

Honors World History II: 6 (and 7) December 2010

Prayer
Current Events:


2010 death toll of US troops nears that of 2001-2008 combined.

The Chapter 11 Section 3 The Age of Napoleon Make-Up Quiz is today.

Cf. http://shanawiki.wikispaces.com/Honors+World+History+II+Fall+2010+Chapter+11+Section+3+The+Age+of+Napoleon+Quiz+Prep+Page

#19. should have listed: "d) Anne Louise Germaine de Staël"

#20. do not answer, skip the question entirely, go on to #21.

New feature:

The electronic edition of the Philadelphia Inquirer is available. We have the Sunday edition, available on Mondays, in addition to the Tuesday through Friday editions on the other days.

Please follow the steps below:

URL: http://nie.philly.com
Click on the words "Access e-Inquirer" located on the gray toolbar underneath the green locker on the opening page.
Login:
Username: bshsinky@shanahan.org
Password: 10888

The electronic editions will be archived at the site for 30 days only.

HW is available below at the bottom of the daily blog post.

Cf. http://vozme.com/index.php?lang=en

Cf. http://www.wordle.net/create

ABCya! Cf. http://www.abcya.com/word_clouds.htm

Or, http://www.glogster.com/login/

1st/5th to enjoy:

Who Wants to Be a Cotton Millionaire?


Cf. http://www.bbc.co.uk/history/british/victorians/launch_gms_cotton_millionaire.shtml



Britain emerged in Victorian times as the world's first industrial power, but the transition wasn't smooth.

Some entrepreneurs made fortunes from the new cotton industry, but many of the factory start-ups went bust. Success depended on a variety of factors, which you will encounter as you play the game.

As you play, your stacks of money will rise and fall, depending on the choices you make, and you'll find out if you can make it as a Victorian entrepreneur.

Choose well, make money and the business will survive. Choose badly, and the businessman could end up in debtors' prison.

ABCya! Cf. http://www.abcya.com/word_clouds.htm

vozMe: Cf. http://vozme.com/index.php?lang=en

The Spinning Mill Animation

Cf. http://www.bbc.co.uk/history/british/victorians/launch_ani_spinning_mill.shtml

Spinning mills used 'line shafting', which is the means by which the power of the steam engine is transmitted along rotating shafts (rods) to spinning or weaving mills.

This animation depicts a spinning mill like that found at Quarry Bank museum in Cheshire. It shows a furnace powering a flywheel, which is there to smooth out the otherwise jerky rotation of the crank.

In spinning mills, which could be multi-story, there are large numbers of ropes coming off the flywheel. These 'rope races' convey power to the mill's different floors.

Spinners and weavers now came each day to work in these first factories, which brought together workers and machines to produce large quantities of goods. Early observers were awed at the size and output of these establishments. One onlooker noted: “The same [amount] of labor is now performed in one of these structures which formerly occupied the industry of an entire district.”

Railroads, p. 365

Stephenson's Rocket Animation
Cf. http://www.bbc.co.uk/history/british/victorians/launch_ani_rocket.shtml

Background

The Rocket was designed and built by George Stephenson with the help of his son, Robert, and Henry Booth, for the 1829 Rainhill Trials.

The Trials were held by the Liverpool and Manchester Railway Company, to find the best locomotive engine for a railway line that was being built to serve these two English cities. On the day of the Trials, some 15,000 people came along to see the race of the locomotives.

During the race, the Rocket reached speeds of 24mph during the 20 laps of the course. This was due to several new design features. It was the first locomotive to have a multi-tube boiler - with 25 copper tubes rather than a single flue or twin flue.

The blast pipe also increased the draught to the fire by concentrating exhaust steam at the base of the chimney. This meant that the boiler generated more power (steam), so the Rocket was able to go faster than its rival, and thus secure its place in history.

The Rocket can be seen at the Science Museum, in London.
One of the most important developments of the Industrial Revolution was the creation of a countrywide railway network. The world’s first major rail line went from Liverpool to Manchester in England. Fanny Kemble, the most famous actress of the day, was one of the first passengers:

“We were introduced to the little engine which was to drag us along the rails. . . This snorting little animal, . . . started at about ten miles an hour. . . . You can’t imagine how strange it seemed to be journeying on thus, without any visible cause of progress other than the magical machine . . .”

Early Socialism, p. 370

While the champions of laissez-faire economics praised individual rights, other thinkers focused on the good of society in general. They condemned the evils of industrial capitalism, which they believed had created a gulf between rich and poor. To end poverty and injustice, they offered a radical solution—socialism. Under socialism, the people as a whole rather than private individuals would own and operate the means of production—the farms, factories, railways, and other large businesses that produced and distributed goods. Socialism grew out of the Enlightenment faith in progress, its belief in the basic goodness of human nature, and its concern for social justice.

Are Utopians Dreamers?

A number of early socialists established communities in which all work was shared and all property was owned in common. When there was no difference between rich and poor, they said, fighting between people would disappear. These early socialists were called Utopians. The name implied that they were impractical dreamers. The Utopian Robert Owen set up a model community in New Lanark, Scotland, to put his own ideas into practice.

Infographic
Owen’s Utopia

For: Interactive Village
Visit: PHSchool.com
Web Code: nap-1941

Owen Establishes a Utopia

A poor Welsh boy, Owen became a successful mill owner. Unlike most industrialists at the time, he refused to use child labor. He campaigned vigorously for laws that limited child labor and encouraged the organization of labor unions.

Checkpoint

What did early socialists believe?

Reading Check

Describing

What type of working conditions did the industrial workers face?

References and Resources

Rise of the Working Class by Jurgen Kuczynski

Making of the English Working Class by E.P. Thompson

Cultural Foundations of Industrial Civilization by John U. Nef

4th of July at OSV.



Redcoats to Rebels at OSV.
Mystic sign. Photo Source: The Next Generation

Whaling in popular culture: Mountain, "Nantucket Sleighride"



The cold hard steel of the harpoon's point
Struck deep into its side.
We played out line and backed the oars
And took the cruel sleighride.

The term "Nantucket Sleighride" was coined by the whalers to explain what happened after they harpooned a whale. (Nantucket Island was considered the whaling capital of the world during the 19th century.) The first strike of the harpoon was not intended to kill the whale but only to attach it to the whale boat. The whale would take off pulling the whale boat along at speeds of up to 23 mph (37 kmh). The whale would eventually tire itself out, the leading officer in the boat would then use a penetrating lance to kill the whale.

Nantucket Sleighride is Dedicated to Owen Coffin who was cabin boy aboard the whaler Essex, which was destroyed by a sperm whale in 1819. Owen ended up in the lifeboat with Captain Pollard, his uncle. Two other lifeboats also put out. During the next 3 - 4 months, the lifeboats separated. One was never seen again, but some of those on the remaining two boats were eventually rescued.
During those long months at sea (and on desert islands), many of the men died. The remainder eventually had to resort to cannibalism to survive. After the dead of natural causes were consumed, the men determined to draw lots to see who would sacrifice his life for the others. Owen Coffin ``won'' the lottery. The Captain tried to take Owen's place, but the youth insisted on his ``right''. The executioner was also drawn by lot. That ``winner'', another young man named Charles Ramsdell, also tried vainly to swap places with Owen. Again he refused. Owen's body kept the others alive for ten days (Captain Pollard refused to eat his nephew). Another man died, and his body kept Pollard and Ramsdell alive a few more days until they were rescued.

Lyrics
Goodbye, little Robin-Marie
Don't try following me
Don't cry, little Robin-Marie
'Cause you know I'm coming home soon
My ships' leaving on a three-year tour
The next tide will take us from shore
Windlaced, gather in sail and spray
On a search for the mighty sperm whale
Fly your willow branches
Wrap your body round my soul
Lay down your reeds and drums on my soft sheets
There are years behind us reaching
To the place where hearts are beating
And I know you're the last true love I'll ever meet
Starbuck's sharpening his harpoon
The black man's playing his tune
An old salt's sleeping his watch away
He'll be drunk again before noon
Three years sailing on bended knee
We found no whales in the sea
Don't cry, little Robin-Marie
'Cause we'll be in sight of land soon

Section 2 Reaction and Revolution.

After Waterloo, diplomats and heads of state again sat down at the Congress of Vienna. They faced the monumental task of restoring stability and order in Europe after years of war. The Congress met for 10 months, from September 1814 to June 1815. It was a brilliant gathering of European leaders. Diplomats and royalty dined and danced, attended concerts and ballets, and enjoyed parties arranged by their host, Emperor Francis I of Austria. The work fell to Prince Clemens von Metternich of Austria, Tsar Alexander I of Russia, and Lord Robert Castlereagh of Britain. Defeated France was represented by Prince Charles Maurice de Talleyrand.


Congress Strives For Peace

The chief goal of the Vienna decision makers was to create a lasting peace by establishing a balance of power and protecting the system of monarchy. Each of the leaders also pursued his own goals. Metternich, the dominant figure at the Congress, wanted to restore things the way they were in 1792. Alexander I urged a “holy alliance” of Christian monarchs to suppress future revolutions. Lord Castlereagh was determined to prevent a revival of French military power. The aged diplomat Talleyrand shrewdly played the other leaders against one another so France would be accepted as an equal partner.

The peacemakers also redrew the map of Europe. To contain French ambitions, they ringed France with strong countries. In the north, they added Belgium and Luxembourg to Holland to create the kingdom of the Netherlands. To prevent French expansion eastward, they gave Prussia lands along the Rhine River. They also allowed Austria to reassert control over northern Italy.

To turn back the clock to 1792, the architects of the peace promoted the principle of legitimacy, restoring hereditary monarchies that the French Revolution or Napoleon had unseated. Even before the Congress began, they had put Louis XVIII on the French throne. Later, they restored “legitimate” monarchs in Portugal, Spain, and the Italian states.

Congress Fails to See Traps Ahead

To protect the new order, Austria, Russia, Prussia, and Great Britain extended their wartime alliance into the postwar era. In the Quadruple Alliance, the four nations pledged to act together to maintain the balance of power and to suppress revolutionary uprisings, especially in France. Another result of the Congress was a system known as the Concert of Europe, in which the powers met periodically to discuss any problems affecting the peace of Europe.

The Vienna statesmen achieved their immediate goals in creating a lasting peace. Their decisions influenced European politics for the next 100 years. Europe would not see war on a Napoleonic scale until 1914. They failed, however, to foresee how powerful new forces such as nationalism would shake the foundations of Europe and Latin America in the next decades.

Reading Check

Explaining

What was the "principle of legitimacy?"

The Conservative Order

Reading Check

Summarizing

What were the views of the conservative movement?

Forces of Change

Liberalism

Nationalism
Balkan Nationalism

Audio

“How is it that they [European powers] cannot understand that less and less is it possible . . . to direct the destinies of the Balkans from the outside? We are growing up, gaining confidence, and becoming independent . . .”

—Bulgarian statesman on the first Balkan War and the European powers

Learn

Focus Question

How did the desire for national independence among ethnic groups weaken and ultimately destroy the Austrian and Ottoman empires?

Audio

Napoleon had dissolved the Holy Roman Empire, which the Hapsburgs had led for nearly 400 years. Austria’s center of power had shifted to Central Europe. Additional wars resulted in continued loss of territory to Germany and Italy. Why did nationalism bring new strength to some countries and weaken others?

In Eastern and Central Europe, the Austrian Hapsburgs and the Ottoman Turks ruled lands that included diverse ethnic groups. Nationalist feelings among these subject peoples contributed to tensions building across Europe.


Revolutionary Outbursts

Greek soldiers



Reading Check

Evaluating

How did liberalism and nationalism begin to break through the conservative domination of Europe?

The Revolutions of 1848
Revolutionary France: Les Miserables (6:41)

Summary

The backdrop for Victor Hugo's novel Les Miserables is revolutionary France in the 1800s. Les Miserables expresses Hugo's passionate belief in the spiritual possibilities of society, despite the presence of evil. Les Miserables also expresses Hugo's fight for justice, democratic ideals, and basic rights for all people.

What was the main theme of Hugo's novel Les Miserables?

What were Hugo's political beliefs?

Writing Practice

How do the choices made by Jean Valjean reflect his sense of justice and compassion for others?

Another French Revolution

Trouble in the German States

Germany




Note Taking

Recognize Sequence: keep track of the sequence of events that led to German unification by completing a chart like the one below. Add more boxes as needed.


Taking Initial Steps Toward Unity

Audio for this section

In the early 1800s, German-speaking people lived in a number of small and medium-sized states as well as in Prussia and the Austrian Hapsburg empire. Napoleon’s invasions unleashed new forces in these territories.
Napoleon Raids German Lands

Between 1806 and 1812, Napoleon made important territorial changes in German-speaking lands. He annexed lands along the Rhine River for France. He dissolved the Holy Roman Empire by forcing the emperor of Austria to agree to the lesser title of king. He also organized a number of German states into the Rhine Confederation.

At first, some Germans welcomed the French emperor as a hero with enlightened, modern policies. He encouraged freeing the serfs, made trade easier, and abolished laws against Jews. However, not all Germans appreciated Napoleon and his changes. As people fought to free their lands from French rule, they began to demand a unified German state.

Napoleon’s defeat did not resolve the issue. At the Congress of Vienna, Metternich pointed out that a united Germany would require dismantling the government of each German state. Instead, the peacemakers created the German Confederation, a weak alliance headed by Austria.
Economic Changes Promote Unity

In the 1830s, Prussia created an economic union called the Zollverein (tsawl fur yn). It dismantled tariff barriers between many German states. Still, Germany remained politically fragmented.

In 1848, liberals meeting in the Frankfurt Assembly again demanded German political unity. They offered the throne of a united German state to Frederick William IV of Prussia. The Prussian ruler, however, rejected the notion of a throne offered by “the people.”

Checkpoint

What was the German Confederation?

Revolutions in Central Europe
The Hungarian Parliament Passes Legislation Funding an Army Against the Hapsburg Empire, 1848

The mixed symbols on the flag of the Austro-Hungarian Empire
A Multinational Empire

Equally disturbing to the old order were the urgent demands of nationalists. The Hapsburgs presided over a multinational empire. Of its 50 million people at mid-century, fewer than a quarter were German-speaking Austrians. Almost half belonged to different Slavic groups, including Czechs, Slovaks, Poles, Ukrainians, Serbs, Croats, and Slovenes. Often, rival groups shared the same region. The empire also included large numbers of Hungarians and Italians. The Hapsburgs ignored nationalist demands as long as they could. When nationalist revolts broke out in 1848, the government crushed them.


Revolts in the Italian States
Italy Before 1861



Note Taking

Reading Skill: Recognize Sequence

As you read and hear a lecture on the Italian revolt, create a time line showing the sequence of events from 1831 to 1871 that led to Italian unification (the time line continues in the next section of the Chapter).




After a failed revolution against Austrian rule in northern Italy, many rebels, fearing retribution, begged for funds to pay for safe passage to Spain. Giuseppe Mazzini (mat see nee), still a boy, described his reaction to the situation:

“He (a rebel) held out a white handkerchief, merely saying, ‘For the refugees of Italy.’ My mother . . . dropped some money into the handkerchief. . . . That day was the first in which a confused idea presented itself to my mind . . . an idea that we Italians could and therefore ought to struggle for the liberty of our country. . . .”

—Giuseppe Mazzini, Life and Writings

Learn

Focus Question

How did influential leaders help to create a unified Italy?
Garibaldi



Reading Check

Identifying

What countries experienced revolutions in 1848?

Eyewitness to History

Revolutionary Excitement

Analyzing Primary Sources, p. 377
And, to anticipate further revolutionary developments, we will consider Karl Marx.

Resources

Books

The Age of Revolution: 1789-1848 by Eric Hobsbawm

The Church in an Age of Revolution by Alec R. Vidler

Congress of Vienna lecture, 3:42
In-class assignment: answer the following questions about the Congress.

What was the Congress meant to accomplish?
Who was the leading figure of the Congress?
Where was he from?
What was his view of democracy?
Who ultimately came to power through this form of government?
In what country was the first major problems they had to face?
What was Germany composed of?
What country was the second major problem?
What was the name of the alliance that was formed?
What countries formed the four parts of the Alliance?
What other important--three country alliance--was formed?



What was the Congress meant to accomplish?

The Congress attempted to tie the Continental nations together and set up a balance of power between the competing interests of the various countries.

Who was the leading figure of the Congress?

Prince Metternich

Where was he from?

Austria

What was his view of democracy?

Democracy is dangerous and unpredictable.

Who ultimately came to power through this form of government?

Dictators rise to power.

In what country was the first major problems they had to face?

Germany

What was Germany composed of?

Several small, feudal-like states and kingdoms. The Congress formed the German Confederation.

What country was the second major problem?

France

What was the name of the alliance that was formed?

Quadruple Alliance

What countries formed the four parts of the Alliance?

G.B., Austria, Prussia, and Russia. The main purpose was to counter any ambition on the part of France.

What other important--three country alliance--was formed?

Holy Alliance: Austria, Prussia, and Russia. The main purpose was to stop revolution and support the monarchies in power.

1) Early Socialism, p. 370
2) The Conservative Order, p. 372
3) Liberalism, p. 373
4) Nationalism, p. 373-74

Students will be assigned to one of four groups to examine the ideas of these four groups. Then, students will advocate the relative merits of their assigned group.

Define the important points associated with your assigned thought system: socialism, conservatism, liberalism, or nationalism. Points to include are their ideas on the economy and the government's role in the economy and society. What are the strengths and weaknesses of each system in terms of balancing individual freedom and public good?

One of the most important points to note is that the terms, liberalism and conservatism, still used today in American politics, are not used in the same way that the terms were used in the 19th Century. They mean different things today.

Can you name leading figures of socialism? Conservatism? Liberalism? Nationalism?

What do you think the Church thought of these various movements? Would they be in favor or oppose aspects of their thought? Why?

The Congress of Vienna, between Sept. 1814 - 9 June 1815, after that France had surrender in May 1814 (Napoleon was finally defeated at Waterloo 18 June 1815).

It was a conference with ambassadors from many European states, chaired by the Austrian statesman Klemens von Metternich. It was the five "great" nations - UK, Prussia, Austria, France and Russia that decide almost everything. Norway was transferred from Denmark to Sweden and Swedish Pomerania was ceded to Prussia.

The first pictures are the Duke of Wellington who is the man who rarely lost a battle. At Waterloo he and combined British/German forces - with help of Blüchers Prussians - defeated Napoleon for the last time. Later he became Prime Minister of Great Britain and in his youth he led battles in India. Then came a pic on Metternich, and then on Talleyrand. After him come a pic on Tsar Alexander I - the most powerful man in Europe at that time. The two last pics are on Austrian castles...first "Schönbrunn" and then "Belvedere".

Congress of Vienna 1815

Ambassadors:

UK = Duke of Wellington

Prussia = Prince Karl von Hardenberg

Austria = Prince Klemmens von Metternich

Russia = Tsar Alexander I

France = Charles de Talleyrand

Sweden = Count Carl Löwenhielm

Music: Russian folk-song.

Ulf Sawert

Queen Hortense de Beauharnais - Album Artistique de la Reine Hortense (Koninklijk Huisarchief Den Haag)
Les jeunes rêves d'amour
Paula Bär-Giese soprano & pianist
La Reine Hortense project (La Reine d'Hollande 1806-1810)
Recording: Kunstzaal Palace 't Loo, Apeldoorn - The Netherlands

Hortense Eugénie Cécile de Beauharnais, Queen of Holland, Grand Duchess of Berg and Cleves, Countess of Saint-Leu (April 10, 1783 - October 5, 1837), was the wife of Louis Bonaparte, King of Holland and the mother of Napoleon III, Emperor of the French.

Hortense was born in Paris, France, the daughter of Alexandre, Vicomte de Beauharnais and of his wife Josephine Tascher de la Pagerie. In 1794 her father was executed during the Reign of Terror. Two years later her mother married Napoleon Bonaparte.
In 1802 at Napoleon's request, Hortense married his brother Louis Bonaparte. The couple had three sons:
• Napoléon Louis Charles (October 10, 1802 - May 5, 1807)
• Napoléon Louis (October 11, 1804 - March 17, 1831)
• Charles Louis Napoléon, later Napoleon III, Emperor of the French (20 April 1808- 9 January 1873)

In 1806 Napoleon appointed his brother Louis, King of Holland. Hortense accompanied her husband to The Hague, in spite of the fact that their marriage was an unhappy one (the paternity of at least one of Hortense's sons has been questioned). In 1810 Louis abdicated as King of Holland and settled in Germany; Hortense, on the other hand, returned with her sons to France.

In 1811 Hortense gave birth to a son by her lover, Charles Joseph, comte de Flahaut:
• Charles Auguste Louis Joseph (October 21, 1811 - March 10, 1865), later made duc de Morny by his half-brother, Napoleon III.



One video features just the Congress of Vienna music with period pictures supplementing the sound.



The Fezzibomb occurred on Friday November 20, 2009. A bunch of Fezziwiggers (dancers from Fezziwig's Tea Emporium at the Dickens Christmas Fair) met in Embarcadero Bart in San Francisco to dance to music provided by Bangers and Mash.

The Congress of Vienna is a choreographed waltz.



Congress of Vienna dance at Gaskell's held in Oakland October 2005

Ye Gaskell Occasional Dance Society sponsors Victorian ballroom dances several times a year. There are afternoon dance lessons and refresher lessons before the dance. Formal dress.
http://www.gaskellball.com

Brassworks is a live brass band led by Frank Beau Davis. They sound much better in person than in this clip.
http://www.brassworksband.com

Scottish Rite Center in Oakland has a beautiful ballroom for this event.
http://www.scottish-rite.org



Creative sock puppet show as a dramatization of the Congress of Vienna of 1815.



THE AMAZING LEGO REANIMATION OF THE CONGRESS OF VIENNA



Twilight of the Hapsburgs: The collapse of the Austro-Hungarian Empire by Z. A. B. Zeman.
Thomas Robert Malthus

Everywhere in Britain, British economist Thomas Malthus saw the effects of the population explosion—crowded slums, hungry families, unemployment, and widespread misery. After careful study, in 1798 he published An Essay on the Principle of Population. He concluded that poverty was unavoidable because the population was increasing faster than the food supply. Malthus wrote: “The power of population is [far] greater than the power of the Earth to produce subsistence for man.”

Malthus was one of many thinkers who tried to understand the staggering changes taking place in the early Industrial Age. As heirs to the Enlightenment, these thinkers looked for natural laws that governed the world of business and economics.

Also a laissez-faire economist, Thomas Malthus predicted that population would outpace the food supply. The only checks on population growth, he said, were nature’s “natural” methods of war, disease, and famine. As long as population kept increasing, he went on, the poor would suffer. He thus urged families to have fewer children and discouraged charitable handouts and vaccinations.

During the early 1800s, many people accepted Malthus’s bleak view as the factory system changed people’s lifestyles for the worse. His view was proved wrong, however. Although the population boom did continue, the food supply grew even faster. As the century progressed, living conditions for the Western world slowly improved—and then people began having fewer children. By the 1900s, population growth was no longer a problem in the West, but it did continue to afflict many nations elsewhere.

Another influential British laissez-faire economist, David Ricardo, dedicated himself to economic studies after reading Smith’s The Wealth of Nations. Like Malthus, Ricardo did not hold out hope for the working class to escape poverty. Because of such gloomy predictions, economics became known as the “dismal science.” In his “Iron Law of Wages,” Ricardo pointed out that wage increases were futile because increases would only cover the cost of necessities. This was because when wages were high, families often had more children instead of raising the family’s current standard of living.

Both Malthus and Ricardo opposed any government help for the poor. In their view, the best cure for poverty was not government relief but the unrestricted “laws of the free market.” They felt that individuals should be left to improve their lot through thrift, hard work, and limiting the size of their families.

Utilitarians For Limited Government

Other thinkers sought to modify laissez-faire doctrines to justify some government intervention. By 1800, British philosopher and economist Jeremy Bentham was advocating utilitarianism, or the idea that the goal of society should be “the greatest happiness for the greatest number” of its citizens. To Bentham, all laws or actions should be judged by their “utility.” In other words, did they provide more pleasure or happiness than pain? Bentham strongly supported individual freedom, which he believed guaranteed happiness. Still, he saw the need for government to become involved under certain circumstances.

Bentham’s ideas influenced the British philosopher and economist John Stuart Mill. Although he believed strongly in individual freedom, Mill wanted the government to step in to improve the hard lives of the working class. “The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will,” Mill wrote, “is to prevent harm to others.” Therefore, while middle-class business and factory owners were entitled to increase their own happiness, the government should prevent them from doing so in a manner that would harm workers.

Mill further called for giving the vote to workers and women. These groups could then use their political power to win reforms. Most middle-class people rejected Mill’s ideas. Only in the later 1800s were his views slowly accepted. Today’s democratic governments, however, have absorbed many ideas from Mill and the other utilitarians.

New Economic and Social Theories

Various thinkers of the day attempted to understand and interpret the dramatic changes brought about by the Industrial Revolution. They responded with a wide range of explanations and solutions, as the documents below illustrate.

Document A

“As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. . . . By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. . . . every individual it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him.”

—From The Wealth of Nations by Adam Smith, 1776

Document B

“In those characters which now exhibit crime, the fault is obviously not in the individual, but the defects proceed from the system in which the individual was trained. Withdraw those circumstances which tend to create crime in the human character, and crime will not be created. Replace them with such as are calculated to form habits of order, regularity, temperance, industry; and these qualities will be formed. . . . Proceed systematically on principles of undeviating persevering kindness, yet retaining and using, with the least possible severity, the means of restraining crime from immediately injuring society, and by degrees even the crimes now existing in adults will also gradually disappear. . . .”

—From A New View of Society by Robert Owen, 1816

Document C

New Lanark Mills, Scotland

Document D

“. . . the power of population is indefinitely greater than the power in the earth to produce subsistence for man. Population, when unchecked, increased in a geometrical ratio. Subsistence increases only in an arithmetical ratio. A slight acquaintance with numbers will show the immensity of the first power in comparison of the second. . . . No fancied equality, no agrarian regulations in their utmost extent, could remove the pressure of it even for a single century. And it appears, therefore, to be decisive against the possible existence of a society, all the members of which should live in ease, happiness, and comparative leisure; and feel no anxiety about providing the means of subsistence for themselves and families. Consequently, if the premises are just, the argument is conclusive against the perfectibility of the mass of mankind.”

—From An Essay on the Principle of Population 1798 by Thomas Malthus

Analyzing Documents

Use your knowledge of the new economic and social theories and the Documents to answer the questions.

1. According to Adam Smith in Document A, individuals promote the good of society because of

1. high ideals.
2. self-interest.
3. government pressure.
4. religion.

2. How did Robert Owen explain the fact that some people become criminals?

1. the invisible hand of fate
2. struggles between the ruling class and the oppressed
3. the influence of problems in society
4. the power of population over production

3. Thomas Malthus argued that a society where all individuals enjoy happiness, comfort, and pleasure is

1. only possible with increased agricultural output.
2. impossible because of the base nature of human greed.
3. impossible because of the pressures of population.
4. possible when people are treated decently and fairly.


Cf. http://www.phschool.com/atschool/worldhistory/tests/kisi/ch19/

The Industrial Revolution Begins (1750–1850)

1. How were Thomas Malthus's views proved wrong?

* a war checked the population growth by the end of the century
* the poor needed the works of Karl Marx in order to escape poverty
* the poor needed to have more children in case many of them died
* the food supply did not diminish as the population rose

2. Malthus and Ricardo agreed that the best cure for poverty was the limitation of family size and

* government intervention.
* thrift and hard work.
* social reform.
* a return to farming.

3. How did the Methodists help the working poor?

* they took food to the poor in the factories
* they taught reading and writing in Sunday school
* they turned against the factory workers and preached change
* they smashed textile machines to protest the workers' injuries

4. Abraham Darby III built the

* steam engine.
* world's first iron bridge.
* world's first steam locomotive.
* world's first major rail line.

5. Why did John Stuart Mill want the government to step in and help the working class?

* John Stuart Mill did not believe in individual freedom.
* Only a revolution would keep the factory owner from destroying his workers.
* Competition in the free market often favored the strong over the weak.
* John Stuart Mill believed that women should not be part of the workforce.

6. How did the agricultural revolution affect small farmers?

* It gave them an opportunity to expand their farms.
* It made them focus solely on raising cattle
* It helped elevate them to the middle class.
* It forced many farmers out of business.

7. The worst abuses and dangerous working conditions happened in the early industrial age because

* nobody cared about living conditions when they first entered the city.
* no laws or reforms were in place to monitor or improve conditions.
* people were used to living and working in unsafe, unsanitary conditions in rural areas.
* a sense of community kept people from worrying about working conditions.

8. The Industrial Revolution brought about

* a high employment rate.
* material benefits.
* improved living conditions.
* high pay rates.

9. Which of the following groups preached that the goal of society should be "the greatest happiness for the greatest number"?

* utilitarians
* capitalists
* socialists
* communists

10. How were middle-class families different from working class families?

* they had maidservants to look after their children
* they lived in tenements
* they wore fancy clothing and ate well
* their children worked in the factories

11. Why might a factory be interested in hiring children?

* parents were more productive if the children worked as well
* they are stronger than many adults
* they could perform certain jobs better than adults
* they were often better educated than the adults who worked all the time

12. Why didn't cottage industry continue in Britain?

* Peasants refused to take on work from British merchants.
* People wanted a place to work outside of the home.
* New machines were too large and expensive to operate at home.
* Transportation of goods demanded the use of the factory.

13. Why were many canals often NOT as successful as the opening of the Bridgewater canal?

* they didn't all have enough traffic to support them
* when laborers were scarce, they weren't all as well built
* people didn't trust transporting goods over water
* merchants often went into debt before the canal was built

14. Who founded the Methodist movement in the mid-1700s?

* Jeremy Bentham
* John Wesley
* Karl Marx
* John Stuart Mill

15. Which group led the way in the agricultural revolution?

* the French
* the Spanish
* the Dutch
* the English

16. What did British farmers introduce during the second agricultural revolution?

* fertilizer from livestock
* domestication of animals
* the seed drill
* improved breeding of livestock

17. At the beginning of the Industrial Revolution, what was Britain's largest industry?

* automobiles
* textiles
* paper
* meat packing

18. What was NOT a reason for the success of the Industrial Revolution in Britain?

* a population explosion
* a skilled workforce
* the rise of new religious movements
* plentiful natural resources

19. How was farm work different from factory work?

* on the farm, work was hard
* on the farm, work was always the same
* on the farm, workers set their own pace
* on the farm, women were not allowed to work

20. Why was iron important during the early Industrial Revolution?

* Iron was used in the production of machines and steam engines.
* Iron was used for fuel.
* Iron was used to build ships.
* Iron replaced coal.


New holiday feature: keep Christ in Christmas

Star in the East - Shape Note Christmas Song, 4:48



This shape note nativity song is here sung from The Southern Harmony, a traditional American shape note tunebook from the 19th century. It also appears in The Christian Harmony and other shape note books, most recently in Karen Willard's collection, 'An American Christmas Harp' (2009). As recorded at the Annual Harrod's Creek Shape Note Convention held in historic Harrod's Creek Baptist Church near Brownsboro, Kentucky, April 26 2009.

'JINGLE BELLS' - Original 1857 Version - Tom Roush-Instrumental, 2:35



This is an instrumental of the original 'Jingle Bells' which was then called 'The One Horse Open Sleigh' As you will hear, the melody of the chorus has been changed over the past 152 years.. This jolly Christmas favorite was written by James Pierpoint for a Sunday school Thanksgiving performance. The first verse is played by a piano and harpsichord.

We Three Kings of Orient Are (Sacred Rendition), 5:38



"We Three Kings", also known as "We Three Kings of Orient Are" or "The Quest of the Magi", is a Christmas carol written by Reverend John Henry Hopkins, Jr., who wrote both the lyrics and the music as part of a Christmas pageant for the General Theological Seminary in New York City. It is suggested to have been written in 1857 but did not appear in print until his Carols, Hymns and Song in 1863. Hopkins composed the song in Williamsport, Pennsylvania, where he was a pastor at Christ Episcopal Church (which still stands at the corner of Fourth and Mulberry Streets).

Ensemble: The Mormon Tabernacle Choir
Period: 19th Century
Written: 1857; USA

That Spirit of Christmas~Music by Ray Charles, 5:06



HW: email (or hard copy) me at gmsmith@shanahan.org.

Monday HW

1. p. 372, Reading Check, Explaining, What was the "principle of legitimacy"?

2. p. 372, Geography Skills, #1-2

Honors Business Economics: 6 December 2010

Prayer
Current Events:
Brown Calls Nov. Jobs Report a `Big Disappointment'
http://www.youtube.com/watch?v=lnusYxm4MwU

Dec. 3 (Bloomberg) -- Scott Brown, chief economist at Raymond James & Associates Inc. discusses the U.S. November jobs report and the outlook for the economic recovery. Payrolls increased 39,000, less than the most pessimistic projection of economists surveyed by Bloomberg News, after a revised 172,000 increase the prior month, Labor Department figures showed today in Washington. Brown speaks with Betty Liu, Michael McKee and Sara Eisen on Bloomberg Television's "In the Loop." (Source: Bloomberg)

No end in sight to U.S. economic crisis as 'scariest jobs chart ever' shows post-recession unemployment is at its worst since World War Two.

Cf. http://iusbvision.wordpress.com/2010/12/05/video-how-tax-cuts-work-in-our-tax-system/

The Chapter 3 Section 1 Quiz is on Thursday.

The Chapter 2 Make-Up Test is today.

Cf. http://shanawiki.wikispaces.com/Honors+Business+Economics+Chapter+2+Test+Prep+Page+Fall+2010

The Ch. 2 Sec. 3 American Free Enterprise Make-Up Quiz is today.

New feature:

The electronic edition of the Philadelphia Inquirer is available. We have the Sunday edition, available on Mondays, in addition to the Tuesday through Friday editions on the other days.

Please follow the steps below:

URL: http://nie.philly.com
Click on the words "Access e-Inquirer" located on the gray toolbar underneath the green locker on the opening page.
Login:
Username: bshsinky@shanahan.org
Password: 10888

The electronic editions will be archived at the site for 30 days only.

Prices and Markets

Chapter 4 Demand

(Supply and) Demand

In-class assignment: in your own words, summarize and explain supply and demand. Draw an individual (each student) sample Supply and Demand Curve as it is described in the video. What is the relationship between prices and quantity demanded? What does it mean in Economics to move towards equilibrium? What is the consumer surplus? What is a producer surplus?

Supply and Demand Screen shot 1


Supply and Demand Screen shot 2, Equilibrium

Supply and Demand Screen shot 3, Consumer Surplus

Supply and Demand Screen shot 4, Producer Surplus

Why It Matters

The Big Idea

Section 1 What is Demand?

ceteris paribus ([key-te-rees pah-ri-boos] other things being equal

Guide to Reading

Section Preview

Content Vocabulary

demand

microeconomics

market economy

demand schedule

demand curve

To get a better picture of demand, economists construct graphs. They try to find out how many people are willing to buy an item at various prices, and then plot that information on a graph like this.


Deriving the Demand Curve

In-class assignment: if asked to explain to a friend who knew nothing about the demand curve, how would you explain it? Where does the demand curve come from?





The Law of Demand


Demand refers to the amount of a good or service that people are willing and able to buy at a specified price.

Mott The Hoople, 1973-4



Best Selling Christmas Items
2009Nook eReader (Barnes & Noble)
2008Elmo Live (Fisher Price)
2007iTouch (Apple)
2006Playstation 3 (Sony)
2005Xbox 360 (Microsoft)
2004RoboSapiens (WowWee)
2002-3Beyblades (Hasbro)
2001Bratz Dolls (MGA Entertainment)
2000Razor Scooters (Razor USA)

market demand curve

marginal utility

diminishing marginal utility

Diminishing Marginal Utility

In-class assignment: define diminishing marginal utility based on the video and its explanation.
What makes us happy? Is Jim happy? Is there a difference if Jim is hungry, or not? Is there a difference between cookie #1 and cookie #2, and thereafter etc.? What happens as he eats cookies? What do we discover according to this experiment? What is the Law of Diminishing Marginal Utility? Is there a point Jim should have stopped eating cookies?




Economists use the word utility to describe the ability of a good or service to satisfy some want we possess. A donut has utility if it can satisfy our hunger; a movie has utility if it satisfies our desire for entertainment. Economists also recognize that the ability of a product to satisfy our want or need may diminish the more frequently it is consumed. The first donut you buy may do a great job of satisfying your hunger, the second may as well. But the third may be less satisfying to you, and you may be totally uninterested in the fourth. The once invaluable donut has lost much of its seductive appeal. We might call this the law of diminishing seductive appeal. But economists are a stodgy bunch, so they call this the law of diminishing marginal utility.

Now given our law of demand, we realize that if the donut vendor cuts his price, we may recover some interest. At half price, we might muscle-up for one more 417 calorie chocolate covered cholesterol enhancing treat. But even at a reduced price, utility will eventually diminish until prices drop again and then again and again.

The laws of demand and diminishing marginal utility combine to produce demand curves that predictably flow downward from left to right. The actual market price for a good may change, and that will trigger a change in the number of units sold, but the relationship between demand and price will remain constant—prices and demand will shift in sync with one another along the demand curve.

Economists refer to this sliding along the demand curve as movement. Movement occurs when changes in the market price for a good causes demand to slide up or down the curve—or when a change in the demand causes



prices to slide up or down the curve.

But economists also recognize the existence of certain factors that will cause the entire curve to shift—move either to the left or the right. Changes in income, consumer tastes or preferences, and in the price of substitution goods and complementary goods will prompt not just movement along the curve but a shift of the curve in one direction or the other.

Imagine you've been lost in the desert, wandering around in the blistering heat without water for days. Somehow you finally stumble into a roadside oasis, a gas station and mini-mart that has sweet, delicious water for sale. You'd probably give your left... leg for a bottle. Your demand for water is off the charts.

So you enjoy that first bottle of water. You no longer feel like you're about to die. Your lips are no longer cracked and dry, your throat no longer parched.

You're thinking about maybe buying a second bottle of water. But you don't need it. You'd pay a few bucks for it, sure, but it's no longer of nearly priceless value to you.

That's diminishing marginal utility.

Equilibrium Price

As useful (and fascinating) as supply and demand curves are on their own, they become even more valuable (and for economists, truly sublime) when combined. When we plot supply and demand for a product on the same graph, we discover how producers and consumers will interact in the marketplace—and where exactly they will converge.

Remember the demand curve looked like this.

And the supply curve looked like this.

Now look at what happens when we combine these graphs (and add a little curviness).

They intersect at a certain point. They intersect at the price where the amount producers are willing and able to supply converges with the amount consumers are willing and able to purchase. This point of convergence is called the equilibrium price. Theoretically it is where supply and demand meet and prices settle. If suppliers ignore demand, and continue to produce units and price them too high, they will not be purchased. Instead they will sit in the warehouse. If they produce too few, demand will go unmet and consumers will clamor for more.
This clamoring for more goods might encourage new suppliers to enter the market. And as we noted above, the entrance of new competitors will increase supply. And when this occurs the market will settle on a new equilibrium price.

If factors such as the introduction of new technology or decreasing production costs shift the supply curve to the right (S2) or if other factors such as new government regulations or increasing production costs shift the supply curve to the left (S3) the market will produce a new equilibrium price.

Similarly, if demand shifts for any reason (the changing price of substitution or complementary goods, changing income, etc.) the market will generate a new equilibrium price.

What's the equilibrium point for an iPhone?  Each time a new model comes out, it seems, Apple ends up with production shortages.  That implies that the sticker price Apple is charging may be too low.  But the company may have other reasons for selling below the equilibrium price... such as not wanting the price for the phones end up too high a few months later, once the initial frenzy has worn off.

Academic Vocabulary

prevail

inversely

Reading Strategy

Products in the News

Wrist Watch

An Introduction to Demand

Main Idea

Economics and You

Demand Illustrated

The Individual Demand Schedule

The Individual Demand Curve

Reading Check

Interpreting

How do you react to a change in the price of an item? How does this illustrate the concept of demand?

The Law of Demand

Main Idea

Economics and You

Why We Call It a "Law"

The Market Demand Curve

Reading Check

Explaining

How does the market demand curve reflect the Law of Demand?

Demand and Marginal Utility

Main Idea

Economics and You

Reading Check

Describing

In-class assignment: working with a partner, and using the graphic organizer, explain how a change in price changes the quantity demanded of an item.

How does the principle of diminishing marginal utility explain the price we pay for another unit of a good or service?


Preview

Guide to Reading
Ch. 4 Sec. 2 Reading Strategy Determinants Of Demand

In-class assignment:

Working with a partner, and using the graphic organizer, explain how a change in price changes the quantity demanded of an item.

Section Preview

Content Vocabulary

change in quantity demanded
Change in Demand vs Change in Quantity Demanded, 5:13
In-class assignment

What happens to demand? Is there anything that could alter the underlying demand? What does a shift to the left indicate? What happens when apartment rent increases? Is a house a substitute? What is the difference between change in demand vs change in quantity demanded?



income effect

substitution effect

Substitution goods represent another factor influencing demand. A substitution good is one that has a similar utility as another—they both satisfy a similar need. If the cost of the substitution good changes, the demand for our original good will be affected. If the price of Twinkies falls, donut eaters may flock to the vanilla crème filled sponge cake that has been “tantalizing taste buds and filling lunch boxes since 1930.” As a result, our demand curve would shift to the left like this.

Income and Substitution Effects, 4:05

In-class assignment:

We want to consider Jimmy. What are Income and Substitution Effects? How do they work? How do they add up to the total price effect? What is the substitution effect? What is the income effect?




But on the other hand, if the price of Ding Dongs rises, demand for donuts as the now more affordable alternative would rise. Then our demand cure would shift to the right.

Like music?  When you buy a record, do you prefer to purchase a digital download from the internet or a physical CD or vinyl from a music shop?
In economic terms, CDs and digital music files are complementary goods.  The low price for digital downloads (free if you bootleg, a buck or so per song at legit stores like iTunes) has caused demand for more expensive physical CDs to crater.
In 2000, Americans bought 942 million CDs, spending some $13.2 billion.  Five years later, as digital music boomed, CD sales had fallen to 705 million units and $10.5 billion in sales.
The future, clearly, is in the download market.  Music on shiny silver plastic discs may soon go the way of the 8-track.

change in demand

There are some goods that have relatively static demand curves. In particular, some goods remain in constant demand regardless of changes in the price. Demand for these goods is called inelastic. (If the demand for a good is sensitive to price changes, it is called elastic.) A handful of factors influence the price elasticity of demand of a particular good: its importance, the availability of substitutes, and the percentage of our income that it costs us.
If a good is essential and we cannot do without it, demand for the good will remain constant regardless of changes in price. Medicine and milk are basic necessities; we will buy them even if the price rises. We will also continue to buy products if there is no substitute or alternative for that product. We can’t substitute water for gasoline; face power is white but it is no substitute for salt. And if a good is cheap, we will buy it even if its price rises. We would spring for a box of matches, even if the price jumped from 79 cents to $1.25.


But even many goods with inelastic demand can acquire greater elasticity over time. If a product’s price remains high for some time, some people will learn to live without it. Gasoline demand is relatively inelastic in the short term. But when high prices persist, people develop alternative transportation strategies—they car pool, buy smaller cars, move closer to their jobs, and ride public transportation.

So let’s review the essentials. The law of demand tells us what we all know—that when prices go up demand goes down and when prices go down demand goes up. Demand measures the amount of a good or service that people are willing and able to buy at a specified price. And a demand curve plots the size of demand at various prices. Several factors influence demand: diminishing marginal utility, income, substitution goods, complementary goods, and tastes or preferences. And the more that a price change influences our willingness and ability to buy a product, the more elastic is that product’s demand.

Factors that Increase Demand, Shifting Curve to the Right:
  • Increased income
  • Increase in price of substitution goods
  • Decrease in price of complementary goods
  • Changing consumer tastes
Factors that Decrease Demand, Shifting Curve to the Left:
  • Decreased income
  • Decrease in price of substitution goods
  • Increase in price of complementary goods
  • Changing consumer tastes
Why It Matters Today
Remember our delicious and entertaining complementary goods, baseball tickets and hot dogs?
Turns out that sales in baseball tickets and Dodger Dogs don't track each other perfectly.  Since the economy went into decline a couple years back, prices for baseball tickets have held steady or even increased.  But attendances haven't fallen too dramatically.  Ballpark hot dog sales, though, have fallen off sharply.
What does that mean? It means that hot dogs have greater price elasticity than baseball tickets.  People still want to go to the ballgame, even if tickets become more expensive relative to incomes.  But they're willing to forego the extra five or ten bucks they might have spent on an overpriced hot dog once they're inside.
Ballpark concession owners from coast to coast must be crying into their $12 "souvenir cup" beers.

substitutes

complements

Complementary goods also impact demand. Complementary goods are goods that go together or are related: beer and pretzels, cameras and film, polyester bell bottoms and platform shoes, Rogaine and hair gel.
When the price of one good changes, its complementary good is affected. If film prices increase, people will buy fewer cameras. If polyester bells drop in price, demand for the four-inch platforms that best highlight the timeless lines of the disco-era bad-boys will rise.  And so on.
The demand curve for a good will shift to the left if the price of its complementary good increases. And vice versa.


One awesome example of complementary goods: baseball tickets and hot dogs.  Because what goes better with America's pastime than a delicious piece of mystery meat on a bun, with ketchup and mustard?

Top 10 Hot Dog Baseball Stadiums for 2005

StadiumHot Dogs Sold
1Dodger Stadium (Los Angeles)1,674,400
2Coors Field (Colorado)1,545,000
3Wrigley Field (Chicago)1,543,500
4Yankee Stadium (New York) 1,365,000
5Minute Maid Park (Houston)1,248,000
6Edison Field (Anaheim)1,133,000
7HHH Metrodome (Minnesota)850,000
8Citizens Bank Park (Philadelphia)800,000
9Shea Stadium (New York)745,000
10U.S. Cellular Field (Chicago)495,000

Academic Vocabulary

principle

illustrated

Reading Strategy

Companies in the News

McMakeover Deluxe

Change in the Quantity Demanded

The Income Effect

The Substitution Effect

Reading Check

Describing

How is a change in the quantity demanded illustrated on the demand curve?

Figure 4.4 Change in Demand, p. 99

In-Motion Animations

Change in Demand

Cf. http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p99.swf

Figure 4.4 Change In Demand





Change in Demand

Consumer Income

The Global Economy and You

Digital Demand in South Korea

Consumer Tastes

Substitutes

Complements

Expectations

Number of Consumers

Reading Check

Explaining

How do changes in consumer income and tastes affect the demand curve?

Ch. 4 Sec. 2 Section Review Determinants Of Market Demand

HW email to gmsmith@shanahan.org or hand in hard copy.

The Chapter 2 Test Test Prep page.

Cf. http://shanawiki.wikispaces.com/Honors+Business+Economics+Chapter+2+Test+Prep+Page+Fall+2010
Santa Claus Is Laying Off His Reindeer, 1:34



Danny's [economic] Christmas song, 1:39



Santa Needs a Bailout for Christmas, 2:48


The Chapter 3 Section 1 Quiz is on Thursday.

Monday HW
1. p. 94, Reading Check, Explaining, How does the market demand curve reflect the Law of Demand?
2. p. 95, Reading Check, Describing, How does the principle of diminishing marginal utility explain the price we pay for another unit of a good or service?

Honors World History II: HW for Next Week

Monday HW

1. p. 372, Reading Check, Explaining, What was the "principle of legitimacy"?

2. p. 372, Geography Skills, #1-2

Tuesday HW

1. p. 373, Reading Check, Summarizing, What were the views of the conservative movement?

2. p. 374, Picturing History, How was Louis-Philippe involved in these events?

Wednesday HW

Feast Day

Thursday HW

1. p. 374, Reading Check, Evaluating, How did liberalism and nationalism begin to break through the conservative domination of Europe?

2. p. 376, Geography Skills, #1-2

Friday HW

1. p. 376, #4

Honors Business Economics Homework for Next Week

Monday HW
1. p. 94, Reading Check, Explaining, How does the market demand curve reflect the Law of Demand?

2. p. 95, Reading Check, Describing, How does the principle of diminishing marginal utility explain the price we pay for another unit of a good or service?

3. Quiz Thursday, Ch. 3 Sec. 1

Tuesday HW
1. p. 95, Review, #1

Wednesday
No school: Feast of the Immaculate Conception
Quiz Thursday, Ch. 3 Sec. 1

Thursday HW
p. 95, #2, #4-5

Friday HW

p. 95, #6-7

Chapter 4 Section 2 Factors Affecting Demand

Guide to Reading
Ch. 4 Sec. 2 Reading Strategy Determinants Of Demand

Section Preview

Content Vocabulary

change in quantity demanded

Change in Demand vs Change in Quantity Demanded, 5:13

In-class assignment

What happens to demand? Is there anything that could alter the underlying demand? What does a shift to the left indicate? What happens when apartment rent increases? Is a house a substitute? What is the difference between change in demand vs change in quantity demanded?



income effect

substitution effect

Substitution goods represent another factor influencing demand. A substitution good is one that has a similar utility as another—they both satisfy a similar need. If the cost of the substitution good changes, the demand for our original good will be affected. If the price of Twinkies falls, donut eaters may flock to the vanilla crème filled sponge cake that has been “tantalizing taste buds and filling lunch boxes since 1930.” As a result, our demand curve would shift to the left like this.

Income and Substitution Effects, 4:05

In-class assignment:

We want to consider Jimmy. What are Income and Substitution Effects? How do they work? How do they add up to the total price effect? What is the substitution effect? What is the income effect?




But on the other hand, if the price of Ding Dongs rises, demand for donuts as the now more affordable alternative would rise. Then our demand cure would shift to the right.

Like music?  When you buy a record, do you prefer to purchase a digital download from the internet or a physical CD or vinyl from a music shop?
In economic terms, CDs and digital music files are complementary goods.  The low price for digital downloads (free if you bootleg, a buck or so per song at legit stores like iTunes) has caused demand for more expensive physical CDs to crater.

In 2000, Americans bought 942 million CDs, spending some $13.2 billion.  Five years later, as digital music boomed, CD sales had fallen to 705 million units and $10.5 billion in sales.
The future, clearly, is in the download market.  Music on shiny silver plastic discs may soon go the way of the 8-track.


change in demand

There are some goods that have relatively static demand curves. In particular, some goods remain in constant demand regardless of changes in the price. Demand for these goods is called inelastic. (If the demand for a good is sensitive to price changes, it is called elastic.) A handful of factors influence the price elasticity of demand of a particular good: its importance, the availability of substitutes, and the percentage of our income that it costs us.
If a good is essential and we cannot do without it, demand for the good will remain constant regardless of changes in price. Medicine and milk are basic necessities; we will buy them even if the price rises. We will also continue to buy products if there is no substitute or alternative for that product. We can’t substitute water for gasoline; face power is white but it is no substitute for salt. And if a good is cheap, we will buy it even if its price rises. We would spring for a box of matches, even if the price jumped from 79 cents to $1.25.


But even many goods with inelastic demand can acquire greater elasticity over time. If a product’s price remains high for some time, some people will learn to live without it. Gasoline demand is relatively inelastic in the short term. But when high prices persist, people develop alternative transportation strategies—they car pool, buy smaller cars, move closer to their jobs, and ride public transportation.

So let’s review the essentials. The law of demand tells us what we all know—that when prices go up demand goes down and when prices go down demand goes up. Demand measures the amount of a good or service that people are willing and able to buy at a specified price. And a demand curve plots the size of demand at various prices. Several factors influence demand: diminishing marginal utility, income, substitution goods, complementary goods, and tastes or preferences. And the more that a price change influences our willingness and ability to buy a product, the more elastic is that product’s demand.

Factors that Increase Demand, Shifting Curve to the Right:
  • Increased income
  • Increase in price of substitution goods
  • Decrease in price of complementary goods
  • Changing consumer tastes
Factors that Decrease Demand, Shifting Curve to the Left:
  • Decreased income
  • Decrease in price of substitution goods
  • Increase in price of complementary goods
  • Changing consumer tastes
Why It Matters Today
Remember our delicious and entertaining complementary goods, baseball tickets and hot dogs?
Turns out that sales in baseball tickets and Dodger Dogs don't track each other perfectly.  Since the economy went into decline a couple years back, prices for baseball tickets have held steady or even increased.  But attendances haven't fallen too dramatically.  Ballpark hot dog sales, though, have fallen off sharply.
What does that mean? It means that hot dogs have greater price elasticity than baseball tickets.  People still want to go to the ballgame, even if tickets become more expensive relative to incomes.  But they're willing to forego the extra five or ten bucks they might have spent on an overpriced hot dog once they're inside.
Ballpark concession owners from coast to coast must be crying into their $12 "souvenir cup" beers.

substitutes

complements

Complementary goods also impact demand. Complementary goods are goods that go together or are related: beer and pretzels, cameras and film, polyester bell bottoms and platform shoes, Rogaine and hair gel.
When the price of one good changes, its complementary good is affected. If film prices increase, people will buy fewer cameras. If polyester bells drop in price, demand for the four-inch platforms that best highlight the timeless lines of the disco-era bad-boys will rise.  And so on.
The demand curve for a good will shift to the left if the price of its complementary good increases. And vice versa.


One awesome example of complementary goods: baseball tickets and hot dogs.  Because what goes better with America's pastime than a delicious piece of mystery meat on a bun, with ketchup and mustard?

Top 10 Hot Dog Baseball Stadiums for 2005

StadiumHot Dogs Sold
1Dodger Stadium (Los Angeles)1,674,400
2Coors Field (Colorado)1,545,000
3Wrigley Field (Chicago)1,543,500
4Yankee Stadium (New York) 1,365,000
5Minute Maid Park (Houston)1,248,000
6Edison Field (Anaheim)1,133,000
7HHH Metrodome (Minnesota)850,000
8Citizens Bank Park (Philadelphia)800,000
9Shea Stadium (New York)745,000
10U.S. Cellular Field (Chicago)495,000

Academic Vocabulary

principle

illustrated

Reading Strategy

Companies in the News

McMakeover Deluxe

Change in the Quantity Demanded

The Income Effect

The Substitution Effect

Reading Check

Describing

How is a change in the quantity demanded illustrated on the demand curve?

Figure 4.4 Change in Demand, p. 99

In-Motion Animations

Change in Demand

Cf. http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p99.swf

Figure 4.4 Change In Demand





Change in Demand

Consumer Income

The Global Economy and You

Digital Demand in South Korea

Consumer Tastes

Substitutes

Complements

Expectations

Number of Consumers

Reading Check

Explaining

How do changes in consumer income and tastes affect the demand curve?

Ch. 4 Sec. 2 Section Review Determinants Of Market Demand