Chapter 6: Supply, Demand and Government Policies

This chapter talks about price ceiling, which are the legal maximum price a good can be sold at, and price floor which is the legal minimum price a good can be sold at. It talks about how a price ceiling or price floor can affect a good by either having surpluses or shortages. Changes in the legal price of a good can either be non-binding or binding. When the government imposes binding prices ceiling in a competitive market, shortages arise and sellers need to ration the scarce sources. When this happens, discrimination tends to occur and the market becomes unfair. The chapter also talks about how the change in the minimum wage affects both firms and laborers. It talks about how the government tends to make laws that help improve the life quality of the poor but in reality, their policies tend to affect the middle class as well. Raising the minimum wage which seems to be a solution, tends to increase total revenue of the workers but leaves a lot of people unemployed in order to be able to pay those workers their now higher salaries. A tax incidence is the manner in which the burden of a tax is shared among the participants in a market, or in simpler terms, the distribution of a tax. For example, the government may choose to tax the firms or the laborers in order to raise revenue. In such cases, if only one of the two is taxed, they end up affecting the opposite curve in the same way. Even if they do share the tax by splitting it, one ends up loosing more than the other and usually, it is the laborer who ends up paying more than the firm.

Chapter 5: Elasticity and its Application

This chapter deals with how to calculate the change in supply or demand. It talks about finding the average change in demand and the average change in price. Then, it talks about how to use the midpoint method in order to get the most accurate measurement of elasticity. It describes the difference between elastic and inelastic relationships and how they are predictable based on a graph. The chapter talks about how the availability of close substitutes, necessities vs. luxuries, definition of the market and the time horizon affect the elasticity of a good. Using the midpoint method, one gets the same answer regardless of the direction of change. The chapter also talks about how curves can be classified by their elasticity. For example, they are elastic when it is greater than one. It is inelastic when it is less than one. When it is equal to one, it is called the unit elasticity. It is also closely related to the slope of a curve. The chapter also deals with how the total revenue is calculated. It is calculated by multiplying the price of a good by the quantity sold.

Current Events Article 1 "Dreams are what keep us humans going, striving to achieve greatness"

The article is written by a person who is against the Keynesian idea of having zero interest. The author gives data to support his claim. He talks about how the government should create economic bubbles to prevent situations like the one today. It also talks about how the government should work to increase the interest rate to spur investment instead of putting government money into firms and Wall Street. The graphs provided in the article prove the current tightening of treasuries and bonds and that the interest rate has flat-lined drastically compared to that of 25 years ago.The negative real interest rate is -1.52% compare to 30 years ago when it was +2.13%. It mentions how free money is actually tight money which is a product of a tiny circle of Wall Street people. The article also talks about how equity markets fall during blow-outs, which the author blames on the Goldman gamblers who have constructed a junk economics index. It also mentions how the trends in borrowing and spending show a complex absence of credit-fueled stimulus.

Econ Chapter 4

The chapter talks about the relationship between supply and demand. It talk about how there is always competition to sell a good, otherwise a monopoly is established with all the power over one specific good. It talks about how the demand curve shows the relationship between one good and the quantity demanded. Also, the chapter deals with how the demand of a good depends on many factors such as the income of people, how much of the good there is, the price of the good and so on.

The chapter explains how the buyers determine the demand for a product and the sellers determine the supply of it. It talks about how there is a competitive market where there are more than one group of firms that produce and sell a certain good. Also, it talks about monopolies and how sometimes, there is only one provider for a specific good who usually makes a lot of profit out of it due to its scarcity. The chapter uses the example of ice cream and shows a graph that correlates a demand schedule showing the relationship between the price of a good and the quantity that is demanded.

Two examples of goods are a normal good and an inferior good. Basically, a normal good is a good that one buys when one has a lot of money. An inferior good is a good that one resorts to when ones income is lower. It also deals with the relationship between complements and supplements of goods.

Principles of Economy Chapter 3: Interdependence and the Gains from Trade

This chapter dealt with the importance of trade. It also mentioned the different types of situations in which trade would and would not be convenient. Graphs can be made to describe the production possibilities. For example, one might want to know how many potatoes can be produced per hour if one focuses on only growing potatoes, vs. how many potatoes one can grow while also growing corn. The chapter talks about the importance of specialization and trade in order for the economy to work smoothly. One term in the chapter was absolute advantage which deals with he ability to produce a good using fewer inputs than another producer. Opportunity cost has to do with what has to be given up in order to obtain an item. Then, comparative advantage deals with the ability to produce a good at a lower opportunity cost than another producer. The chapter talks about how in some cases, international trade is most convenient for both the country that exports and the one that imports.  In conclusion, comparative advantage shows how trade can make everyone better off. Living in an interdependent economy is much better if one knows where and when to trade.