...Essay Three The president of the Seattle credit card processing company Gravity Payments, Dan Price, recently announced that a cut would be made to profits and his pay in order to raise the minimum wage at the firm up to $70,000 a year. This move by Mr. Price has drawn both applause from some and criticism from others. Among those criticizing the move, suggestions are being made stating the move is counterproductive because it creates an incentive for workers to slack off and be lazy, some insist it is not the right method of operating, and Rush Limbaugh has gone as far as referring to this method as being “pure, unadulterated socialism.” By setting this new minimum wage, Mr. Price is not following the forces that influence wages and rule to maximize profits within the market, instead he is deciding to do what he believes is best for him, his employees, as well as the firm, specifically in the long-term. Mr. Price also suggests that his decision will help reveal the “corrosive effects of income inequality” in society. Another word in is defense was made by an economist at the conservative Manhattan Institute for Policy Research, by stating “you get what you pay for” when dealing with the labor market. Only after a few days after Gravity Payments made the announcement, they “heard from more than 3,500 hopeful applicants” and “signed up several new clients.” The decision by Dan Price to increase minimum wage will definitely affect both the demand and supply of labor...
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...Differentiating Between Market Structures ECO/212 Principles of Economics Monday, November 8, 2007 Dr. Rudolph Differentiating Between Market Structures Executive Summary Starbucks coffee has been around since 1971. With its objective to be the most recognized company for coffee in the world, the company faces a great task of expansion. “Starbucks mission is to inspire and nurture the human spirit one person, one cup and one neighborhood at a time” (Starbucks corporation, 2005). Starbucks plans are derived from their unending customer service that is influenced by the labor market and market structure of the company. They know the value of their employees so they continue to aid them in his or her everyday success and well being. Although the company has expanded its services oversees it has been challenged greatly in the categories of goods for North America. The natural monopolies have challenged the company to venture into new avenues that will allow them to continue earning money from their once leading specialty coffee. Categories of Goods All goods can be put into a certain category based on whether or not the good is “rival” and/or “excludable”. A good is considered to be rival when “one person’s consuming a unit of a good means no one else can consume it” ( Hubbard & O’Brien, 2010, p. 148). A good is considered to be excludable when “anyone who does not pay for a good cannot consume it” (Hubbard & O’Brien...
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...ECO/212 Final Examination Study Guide This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers. Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week. The Student Guide provides a breakdown of the readings that align to the Final Examination questions. Week One: Principles of Economics Objective: Explain how the principles of economics relate to decision-making, interaction, and the workings of the economy as a whole. 1. Economists make use of assumptions, some of which are unrealistic, for the purpose of a. teaching economics to people who have never before studied economics b. advancing their political agendas c. developing models when the scientific method cannot be used d. focusing their thinking Objective: Compare and contrast economic systems. 2. In a market economy, a. supply determines demand and, in turn, demand determines prices b. demand determines supply and, in turn, supply determines prices c. the allocation of scarce resources determines prices and, in turn, prices determine supply and demand d. supply and demand determine prices...
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...Federal Reserve Paper Money to the global market and governments around the world consider it to be an object that has value. There is a common understanding that money is used to exchange or trade services and goods throughout the world. In the early 1900’s the Central banking system and Federal Reserve were founded by the United States Congress resulting from the aftermath of an economic crisis that shook the United States financial stability (Thai Press Reports, 2009). The Federal Reserve was mandated with providing regulatory and monetary obligations. The Federal Reserve has an extensive knowledge and experience managing a fast majority of financial markets for both domestic and foreign circumstances. The Federal Reserve plays a critical role during an economic crisis according to the Treasury Department to manage and prevent financial emergencies. The Federal Open Market Committee is the authority head over of the Federal Reserve Board. The Federal Reserve can manage interest rates on loans to banks and higher interest discourages banks from lending as freely; lower interest rates have the opposite effect. Reserve requirements are mandated by the Federal Reserve and what banks are required to keep in their loan portfolio. Unemployment numbers rose although there was an increase in output during the second half of 2009. Unemployment hit a peak that we have not seen since the late 1980’s although reported job losses have slowed employers do not seem...
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...Differentiating Between Market Structures Nikki Branch ECO212 November 1, 2010 Alex Gialanella Differentiating Between Market Structures When examining market structures a basic knowledge of the types of goods offered is necessary. The four categories of goods are public goods, private goods, common resources, and natural monopolies. Public goods, private goods, and common resources can either be rival or excludable. As consumers in the market, it is necessary to know the similarities and differences between each of these categories of goods. A basic definition of what is a rivalry or nonrival good and what is excludability and nonexcludable is necessary to begin. A rivalry means that if “one person consumes a unit of a good no one else can consume it” (O'Brien, 2010). Excludability means that if a someone does not pay for a good it cannot be consumed (O'Brien, 2010). Each of the four categories of goods will fall into one or the other of the above. Private Goods These goods are both rival and excludable. According to Thayer Watkins (The Nature of Public Goods, Para 1) of the San Jose State University Economics Department, “a private good is such that if one person get one more of them then necessarily there will be less for other people. No person is able to consume these goods without buying them (O'Brien, 2010). If a consumer goes and gets a haircut at a local salon, no other consumer can get that same haircut. Public Goods In contrast...
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...Running head: SUPPLY AND DEMAND AND ELASTICITY PAPER Supply and Demand and Elasticity Paper Principles of Economics ECO212 Supply and Demand and Elasticity Paper Supply and demand is perhaps one of the most fundamental concepts of economics and is the backbone of a market economy. The relationship between demand and supply underlie the forces behind the allocation of resources. (Investopidia A forbe digital company, n.d.). In this paper we will discuss what causes changes in supply and demand, determine how changes in price and quantity will influence market equilibrium. This paper will also describe how the necessity of a good and the availability of substitutions affect price elasticity and compare and contrast market systems and the role of an economist within these systems. Supply is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers. Supply also refers to the quantity of goods a vendor or suppliers are willing to make at a certain price that will benefit the growth of that vendor’s or supplier’s profits, business and demand. Demand refers to how much (quantity) of a product or service is desired by buyers. (Investopidia A forbe digital company, n.d.) The law of demand is based off of “the higher the price is the lower the demand of the product will be.” Demand goes down. “If the price comes down the higher the demand of the product will be.” Demand goes up. The correlation...
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...How People Make Economic Decisions Francisca A. Castellanos ECO212 January 18, 2011 Evanthis (Pete) Mavrokordatos How People Make Economic Decisions Decisions, decisions, decisions…Decisions are the worst, and yet we must make them each and every day. The ten principles of economics explains how people make decisions, how people interact, and how the economy as a whole works. Economics is a behavioral science, which studies how societies manage their scarce resources (Hubbard-O’Brien, Glossary). Societies have different economic interactions that are affected by the type of economic system present. The main attributes of each system are as follows. In a market economy decisions of households and firms interacting in markets allocate economic resources (Glossary). In a centrally-planned economy the government decides how economic resources will be allocated (Glossary) and in a mixed economy economic decisions result from the interaction of buyers and sellers in markets but the government plays a significant role in the allocation of resources (Glossary). My small society (household) depends on me to allocate our scarce resources (monetarily), taking into account our abilities, efforts, and desires. My husband makes decisions based on our emotional needs as a family, yet both parts are equally important. How People Make Decisions Principle One: People face trade-offs. Making decisions requires trading off one item for another. I face this dilemma all the time because...
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...Introduction Starting a business is something individuals do on a daily basis. It is very thoughtful process and requires a great deal of research and mathematical equations and figures. If I had decided to start Internet-based business selling cookbooks online, there are many different factors to consider before starting the business. These factors would include fixed cost, variable cost, estimated books sold, and profit. I currently make $50,000 a year. The retail cost of the books are $30 each. The average cost of each book will be $20. We’re going to assume the demand equation will be as follows; Q = 40,000 – 500P, where Q = the number of cookbooks sold per month P = the retail price of books. Graphs and Calculations Total variable cost = variable cost per unit × quantity × annual 20 × 22,000 × 12 = $5,280,000 Total revenue = price per unit × quantity × annual 30 × 22,000 × 12 = $7,920,000 Fixed cost = $16,000 Total cost = fixed cost + variable cost $5,280,000 + $16,000 = $5,296,000 Profit = revenue - cost $7,920,000 - $5,296,000 = $2,624,000 Technology (Web design and maintenance) $5,000 Postage and handling $1,000 Miscellaneous $3,000 Inventory of cookbooks $2,000 Equipment $4,000 Overhead $1,000 Demand for cookbooks between the price of $25 and $35 using the equation Q = 40,000 – 500P. Q = $40,000 - 500 × 25 = 27,500 Q = $40,000 - 500...
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...ECO212 Scott Shaw 3/20/2011 Trade in today’s society is one of the major ways goods get around the world. This includes services provided in the United States, as well as those around the world. It is both mind boggling and perplexing the number of goods traded on a daily basis. With this major amount of trading there are both advantages and disadvantages. Let’s look at some of these advantages and disadvantages of trading internationally as well as some issues that arise due to international trade, the role of the government in the trading process, and the role of the World Trade Organization (WTO). An advantage of international trade is that it allows for the enhancement of domestic competitiveness. This allows an organization to get offers from other countries in the future which gives them the variety to choose from in the long term. Another advantage to trading internationally is that an organization can reduce their dependence on existing markets. If a market is low on a substance that is needed, then the organization can trade for it internationally with a country with a plentiful supply of what you need. Also, international trading will extend the sales potential of existing products. The more exposure that the product gets in international markets, the more profits a company sets to gain, thus creating better sales opportunities in the long run for the company doing the trading. With these advantages, there comes some disadvantages. One disadvantage...
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...Differentiating Between Market Structures In order to understand the difference between market structures, it is vital to comprehend how supply and demand are affected by public and private goods, common resources, and monopolies. These structures directly affect how labor market equilibrium is established. There are a variety of organizations that show this market structure, which directly and indirectly affect labor supply and demand. For example, Wal-Mart is one specific company that displays characteristics from several different market structures. All goods available for consumption have two major characteristics and are put into two categories: excludable goods, which consumers can prevent consumers who do not pay for it from using it, or rivalrous goods, which are goods whose consumption by one consumer prevents simultaneous consumption of another consumer. Four separate classifications divide the goods. The classifications are private goods, public goods, common resources, and natural monopolies. Private goods are excludable, those which at low cost prevent those who have not paid for it from consuming it, and rival in consumption, those consumed for enjoyment by only one consumer. Most goods in the economy fall into this category. An example of a private good is designer clothing. A consumer can have designer clothing if the consumer is willing and able to pay for it, and once the consumer owns the clothing, no other consumer can have it. Public goods are the opposite...
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...Supply, Demand, and Price Elasticity Team C-Carefree Challengers Kimberly Badgley, Randall Coakley, Stacy Engram, Misty Landwehr, Geneva Krager, and Gregory Minor ECO/212 September 13, 2010 Dr. Lyn Bush Supply, Demand, and Price Elasticity Introduction. (Misty) Changes in Supply and Demand (Kimberly) According to Hubbard and O’Brien (2010), the demand side of the curve influences by not what a customer wants to buy but what a buyer is willing to purchase. The demand curve shows the association between the price of a product and the amount of the product demanded. When the value of merchandise falls, the demand increases. Further, income, prices of a related product, tastes, population and demographics, and estimated future prices cause the change in demand (Hubbard & O’Brien, 2010). Income is relevant when a person cannot afford a product because of a lack of income. The prices of a related product or substitution will motivate a person to buy the cheaper of the two products. Tastes are what a person is willing to buy by his or her preference. Population is significant because if a product is popular, then more people will want to buy that product. If a person suspects prices will increase, then he or she will buy now, but if a person suspects prices will decrease, he or she will wait until the prices come down. Supply is the quantity of a good or service that a company is willing and able to supply at a given amount (Hubbard & O’Brien, 2010). The...
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