Beyond the Sound Bites
John Hofmeister on Fox Business News "Follow the Money" 2/1/2011
Cf. http://www.youtube.com/watch?v=P0I6SN96aLI
Moodys Analytics Chief Economist Mark Zandi discusses the state of U.S. manufacturing, small business job growth and whether the economy can achieve 4% growth this year.
The Ch. 4 Sec. 2 Quiz is tomorrow (sorry for the shorter notice due to the snow day).
Standard feature:
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URL: http://nie.philly.com
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Chapter 6 Prices and Decision Making
Ch. 6 Sec. 1 Reading Strategy
Katrina Fallout
The Economic Impact of the BP Oil Spill
The Global Economy and You
Advantages of Prices
Reading Check
Summarizing
In what way do prices perform the allocation function?
Allocations without Prices
Rationing
Problems with Rationing
Reading Check
Contrasting
What are the differences between the price system and rationing?
Prices as a System
Reading Check
Identifying
How do prices allocate resources between markets?
Ch. 6 Sec. 1 Review
In-class assignment: with a partner, identify the problems associated with rationing.
Case Study
I Bought It On eBay
Section 2 The Price System at Work
Economists develop economic models of markets with supply and demand curves in order to analyze and predict outcomes. In a competitive market, the forces of supply and demand establish prices. A temporary surplus drives prices down; a temporary shortage forces prices up. Eventually, the market reaches the equilibrium price where there are neither shortages nor surpluses. Changes in supply or demand can disturb the market, but the market will tend to find its new equilibrium with the help of temporary shortages and/or surpluses. Whenever supply or demand for a product fluctuates, the elasticity of the two curves affects the size of the price change. Competitive markets represent the ideal, but the lessons learned from them apply to other markets as well.
Ch. 6 Sec. 2 Reading Strategy
In-class assignment: with a partner, complete the graphic organizer by describing how a surplus and a shortage affect prices, demand, and supply. .
In-class assignment, working with a partner, answer the following.
In your own words, explain the price system.
Does one person make a pencil?
Do it take many people and cultures to produce even simple goods such as pencils?
Does it take cooperation?
Is it likely that the differences between people would make them hate each other if they met?
Then what brought all these people together?
What does the price system foster if left unregulated according to Friedman?
Milton Friedman, Free to Choose, Power of the Market - The Pencil (explains the price system), 2:11
Guide to Reading
Section Preview
Content Vocabulary
economic model
equilibrium price
surplus
In-class assignment, with a partner, answer the following.
As illustrated in the video, draw the graph.
Which direction does the demand curve go?
Which direction does the supply curve go?
Why (for each curve)?
What is the intersection of the curves called?
What does the idea of the surplus entail?
What is the red (in the video) section called?
What lines define the consumer surplus?
Can prices be determined as a result?
Equilibrium price and surplus, 6:27
Description of equilibrium price, consumer surplus, producer surplus and social surplus using supply and demand diagrams.
shortage
Academic Vocabulary
Reading Strategy
Companies in the News
Want prime seats? Get ready to bid?
The Price Adjustment Process
A Market Model
Figure 6.1 Market Equilibrium
Surplus
Shortage
Figure 6.2 Surpluses and Shortages
In-class assignment, with a partner, answer the following:
When does a surplus occur?
When does a shortage occur?
What does Panel A illustrate?
What does Panel B illustrate?
Cf. http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p150.swf
Equilibrium Price
Reading Check
Summarizing
How do surpluses and shortages help establish the equilibrium price?
Explaining and Predicting Prices
Change in Supply
Figure 6.3 Changes in Prices
Change in Demand
Change in Supply and Demand
The Importance of Elasticity
Careers
Real Estate Agent
Real estate agents, among others such as actors (including voice actors), artists, novelists, freelance writers, and similar creative artists as talents are generally compensated on a "per job" basis, and thus are not treated as employees; as freelancers, they file a 1099 form for their taxes. They are not, strictly speaking, an employee of a company. One proposal of health care might be to demand that employers purchase health care and to be treated as regular employees of companies.
This is an expensive proposition, likewise, a 1099 provision, voted down on 2 February 2011, is a piece of "Obama’s health care overhaul, rolling back a new tax reporting requirement that’s been universally panned by business owners. . . . The provision would have required business owners to file 1099 tax documents on all cumulative purchases from a single vendor that total more than $600 in a year."
The amendment was proposed by Sen. Debbie Stabenow (D-Mich.).
“This amendment is a common-sense solution for business owners who need to be focused on creating jobs, not filling out paperwork for the IRS,” she said.
Cf. http://www.politico.com/news/stories/0211/48726.html
Prices and Competitive Markets
Reading Check
Explaining
How does the elasticity of a good affects its price?
Business Week Newsclip
What's Raining on Solar's Parade?
Solar Power: Why Economics Matters, 7:12
Ch. 6 Sec. 2 Review
In-class assignment, with a partner, complete the graphic organizer to show how a change in demand and supply affects the price of a product.
Section 3 Social Goals and Market Efficiency
Prices work as a system to allocate resources between markets. However, if prices are fixed in one market, temporary shortages and surpluses tend to become permanent. A price ceiling, such as rent control, is one form of fixed price; a price floor, such as the minimum wage, is another example. Agriculture is especially hard-hit by price changes, because demand and supply tend to be inelastic, while weather often causes the supply curve to change. Therefore, to help farmers, the federal government established the Commodity Credit Corporation (CCC), an agency in the Department of Agriculture. The CCC then used a target price, which is essentially a price floor, to help stabilize farm prices. As a result, over the years, the government has established other forms of support for agriculture in the economy.
In-class assignment, with a partner, complete the cause-and-effect chart by explaining the effects of price ceilings and price floors.
Guide to Reading
Section Preview
Content Vocabulary
price ceiling
Price Floors and Price Ceilings, 5:59
In-class assignment: with a partner, answer the following:
What happens when the government interferes with the market mechanism by artificially imposing a "better" price?
What may interfere with the market?
How does the video define price floor?
Who is the price floor meant to protect?
What is the seller protected from?
What kinds of businesses would warrant such help?
Rather than impose an artificial price on the market resulting in all manner of other problems is there any way to manage the market to get the equilibrium price up to Pf?
Define price ceiling.
Who is a price ceiling meant to protect?
Would you rather pay a higher price for gas if you knew you could get it, or, would you rather pay a lower price for gas but take the chance none would be available?
Are there ways to make a lower price of gas available instead of imposing a government price?
minimum wage
Minimum Wage, 2:30
In-class assignment, with a partner, answer the following:
Before Congress, who testifies in favor of minimum wage?
Do labor unions generally work for minimum wage?
Why do labor unions favor a minimum wage?
Which groups are often harmed by the minimum wage?
Are small businesses harmed?
price floor
target price
nonrecourse loan
deficiency payment
Academic Vocabulary
Reading Strategy
Issues in the News
Minimum Wage Rise Hurts Students
Distorting Market Outcomes
Price Ceilings
Figure 6.4 Price Ceilings
Price Floors
Figure 6.5 Price Floors
Reading Check
Analyzing
What are the negative and positive aspects of price ceilings and price floors?
Agricultural Price Supports
Loan Supports
Deficiency Payments
Figure 6.6 Deficiency Payments
Conservation "Land Banks"
Reforming Price Supports
Continued Agricultural Support
Reading Check
Summarizing
What has been the effect of agricultural price supports?
When Markets Talk
Reading Check
Examining
Can you think of any other examples of markets "talking"? Explain
In-class assignment, with a partner, use the graphic organizer to illustrate how price floors affect quantity demanded and supplied.
Did You Know?
Profiles in Economics
Margaret (Meg) Whitman, eBay
Debates in Economics
Should College Athletes Be Paid?
Should College Athletes Get Paid?" 3:14
In-class assignment, with a partner, summarize the perspectives from players, a coach, and an administrator, about whether college athletes should get paid or not.
Ch. 4 Prep
Cf. http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit2/chapter4/
Multiple Choice Quiz
Cf. http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit2/chapter5/self-check_quizzes.html
Crossword Puzzle
Cf. http://www.glencoe.com/olc_games/game_engine/content/gln_ss/epp_08/ch05/index.html
Flashcard
Cf. http://www.glencoe.com/qe/efcsec.php?qi=15424
Ch. 5 Prep
Chapter 5 Supply Multiple Choice Quiz
Cf. http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit2/chapter5/self-check_quizzes.html
Chapter 5 Puzzle
Cf. http://www.glencoe.com/olc_games/game_engine/content/gln_ss/epp_08/ch05/index.html
Chapter 5 Supply Flashcards
Cf. http://www.glencoe.com/qe/efcsec.php?qi=15424
Ch. 6 Prep
Chapter 6: Prices and Decision Making
Multiple Choice Quiz
Cf. http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit2/chapter6/self-check_quizzes.html
ePuzzle Concentration
Cf. http://www.glencoe.com/olc_games/game_engine/content/gln_ss/epp_05/chapter06/index.html
Academic, Glossary, People/Places/Events
Cf. http://www.glencoe.com/qe/efcsec.php?qi=15429
Chapter 7 Preview
Cf. http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit2/chapter7/
1970 SS454 Chevelle, LS6 History, 4:17
1970 SS Chevelle TV Commercial Ad, 1:05
Email (or hand in hard copy) to gmsmith@shanahan.org.
Wednesday HW
1. p. 146, #5; p. 147, #1-2
Thursday HW
1. p. 154, #1, 3, 4
Friday HW
1. p. 161, #1
