Chapter 4 The Market Forces of Supply and Demand

Uber and Lift have been industry changing companies and continue to push regulators and consumers to keep up or be left behind. Taxi's for a long time had very little to compete with terms of private, quick, door to door service until these new Gig companies came on the scene. Fast easy service, up front pricing and a modern user interface brought these companies to the forefront of our daily lives faster than the regulators or cities could effectively stay ahead of the business.

The cost of a taxi medallion must be linked to its value, the amount of money to be made from this permit. If the money to be made from a taxi medallion goes down, then the value of the medallion drops with it. Uber allowed drivers to connect with riders and removed a large part of the taxi user base and most likely the revenue gained from the cost of the medallion.

I have enjoyed learning more about the minimum wage from an economics stand point. As a worker I always wanted a higher wage and would be a strong proponent of the minimum wage. However I have read and listened to discussions which point out some fallacies of the minimum wage. I do believe the minimum wage reduces the work force due to the cost. I discussed this some in my discussion post but believe that a more expensive worker can be dropped faster than a less expensive worker. I am starting to believe that markets will set prices. Trying to control human behavior and the changing behavior of supply and demand is fraught with discrepancies and miscalculations.

As the rate increases the labor supply increases but the labor force can decrease. The discussion of supply and demand and its correlation to wages and jobs is a very interesting aspect of economics and of the world we live in today.

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Chapter 3 Interdependence and the Gains from Trade

This chapter reinforced the term opportunity cost which is what we give up to get something else. I see this in my life as I struggle with time with my family vs. the time to do certain chores and work such as home or vehicle maintenance. These are things I enjoy doing when I have time which was more prevalent before our child. I have a hard time justifying the time away from the family to repair the car versus the cost of the repair by someone other than me.

International trade is older in this Country than the Country itself. Timber and other products were traded and shipped as soon as possible from the "new" world. It has allowed the United States and other countries to have economic advances which has led us to where we are now with trade. There are many horrific situations occurring in the world from the requirements of international trade and these should be a priority to the consumers and producers, however the global benefits the citizens of many countries have experienced, I believe is worth the cost of trading overseas, land and in the sky. Cultural differences and political unrest are factors to be aware of in global markets along with many other vectors.

I'll continue to try and support my local economy as much as possible by shopping local and supporting the local businesses. I'll also always be looking to support companies and products that reflect and magnify my beliefs and opinions. I do not feel overly concerned that TV's produced in South Korea are cheaper than an American made TV if there even is one. We have chose to not produce TV's and compete with other countries but to use our resources elsewhere in the economy.

I am currently shopping for a laptop and honestly where the computer is made is of little relevance to my final decision. The specs, design and price are the biggest deciding factor to me. I just assume that any decent laptop in the price point I want  could not be built in the US at this time. There are a few companies which do manufacture some products here but the vast majority of laptops are made overseas. I could trade my money, less in the terms of specs or design and get something made in the United States but I do not see any benefit from doing this.

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Chapter 2 Thinking Like am Economist

Salida, Colorado is a small mountain town that exhibits a strong sense of community. And through this sense of community, locals tend to want to help and support the other members of the local economic base. Some studies have shown that a larger portion of every dollar stays in a local community when spent at a local merchant. As a small city Salida merchants often can't compete with larger markers or online marketplaces. 

Limiting factors for goods being sold by local merchants could be the customer base, trends outpacing local sourcing, or greater expense in shipping or supplies among others. These factors would set the production possibilities frontier or PPF limits which could be demonstrated in a graph. For example,consider a ski shop selling ski clothing. High prices would limit purchases but at a higher profit, while lowering the cost sells more suits for less profit.

I think what the economist in the video misses is that buying local doesn't necessarily have to mean locally sourced from sheep to sweater in my opinion. Buying local is choosing to shop at local shops or merchants to buy the things you might buy but not typically in the local marketplace. The local shop is selling the same snowsuit as a larger online or national retailer manufactured in the same factors abroad, but buy buying local you are putting money into the hands of your community and perhaps more of that money stays local and supports the community as a whole.

Efficiency on a PPF graph is producing the correct amount of widgets with the resources available. This is shown graphically when a point of production falls on the PPF line between widgets produced and the resources available.  

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Chapter one

 

1. What in this chapter made you think about an economic concept differently than your previous beliefs?  
2. What new questions do you have now about the US economy based on this chapter?

    Chapter one of the text briefly explained the theory of economics and listed the 10 Principles of Economics. 

I do think of trade the offs in my life decisions, but I do not really use economics theory to understand the decisions I make. This is be fun to start to understand and perhaps change some habits. 

Incentives to shop. That is how the US government is trying to kick start our economy. I listen to Kai Ryssdal on Marketplace and he is always reminding listeners that our economy is based on us consumers, on the shopping we do and the things we buy. I will be interested to see what incentives work in our new economy and which never get of the ground. I am also interested in seeing where the fraud came from and who really benefited from government interventions.

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