Welcome to the CISS Economics website. . .
This site is designed to help you prepare for your semester exam. At the right, you'll notice links to your classmates' notes. The selected topics serve as a collective outline of essential information you'll want to focus on as you review. At the right, you'll also notice "Economics Resources," which contains, among other links, a link to the Glencoe textbook website with activities and practice quizzes.
You can also find a complete copy of all the notes passed out in class here.
Please do not hestitate to send me an email with any questions or suggestions. . .
vicklauren@gmail.com
Public Utilities & Subsudies
Notes by Monica
1. Public Utilities
• Is an example of how the government plays an indirect role when it helps the market economy operate smoothly and efficiently.
• It means municipal or invest or owned companies that offer products. For example: water, sewerage, electric services.
• They have little competition and want government supervision. Do to the little competition they have little incentive to offer reasonable prices.
• Government gives money to social security checks, veterans, benefits, financial aid to college students, rent subsides, unemployment companies. They give these recipients the power to “vote” by making their demand known in the market. It influences the production of goods and services.
2. Subsidy
• Is government payment to an individual, business, or other group to encourage or protect economic activity.
• They lower the cost of production and encourage producers to remain in the market and new producers to enter.
• When subsidies are repealed cost goes up, this causes producer to lave the market and supply curve shifts to the left.
• These subsidies help farmers in the milk, cotton, wheat, and soybean industries support their income. It attracted many farmers into the farming industry.
3. Market Failure
• Is a condition that causes a competitive market to fail.
• Five main types of market failure:
- Inadequate Competition: it happens when merges and acquisitions become big and with fewer firms dominating the market, so the decrease in competition reduces the efficient use of scarce resources. If a firm does not face adequate competition they could expend the money on big salaries or bonuses and other benefits. Inadequate competition may enable business to influence politicians in order to get special treatment that then enriches it managers and owners.
- Inadequate Information: if a resource is not use correctly everyone most have adequate information about market conditions. The information is posted on internet or newspapers,.
- Resources Immobility: Land, capital, labor, and entrepreneurs do not move to markets where returns are highest, they stay put and may be unemployed.
- Public Goods: are goods or services whose benefits are available to everyone and are paid for collectively. Examples: uncrowned highways, national defense, flood control measures, and police and fire protection.
- Externalities: economic side effect that neither harms nor benefits an uninvolved third party that is not involved in the activity that causes it. There is negative externality that means harmful side effect that affects an uninvolved third party because of the actions of others. Finally the positive externality is the beneficial side effect that affects an uninvolved third party.
1. Public Utilities
• Is an example of how the government plays an indirect role when it helps the market economy operate smoothly and efficiently.
• It means municipal or invest or owned companies that offer products. For example: water, sewerage, electric services.
• They have little competition and want government supervision. Do to the little competition they have little incentive to offer reasonable prices.
• Government gives money to social security checks, veterans, benefits, financial aid to college students, rent subsides, unemployment companies. They give these recipients the power to “vote” by making their demand known in the market. It influences the production of goods and services.
2. Subsidy
• Is government payment to an individual, business, or other group to encourage or protect economic activity.
• They lower the cost of production and encourage producers to remain in the market and new producers to enter.
• When subsidies are repealed cost goes up, this causes producer to lave the market and supply curve shifts to the left.
• These subsidies help farmers in the milk, cotton, wheat, and soybean industries support their income. It attracted many farmers into the farming industry.
3. Market Failure
• Is a condition that causes a competitive market to fail.
• Five main types of market failure:
- Inadequate Competition: it happens when merges and acquisitions become big and with fewer firms dominating the market, so the decrease in competition reduces the efficient use of scarce resources. If a firm does not face adequate competition they could expend the money on big salaries or bonuses and other benefits. Inadequate competition may enable business to influence politicians in order to get special treatment that then enriches it managers and owners.
- Inadequate Information: if a resource is not use correctly everyone most have adequate information about market conditions. The information is posted on internet or newspapers,.
- Resources Immobility: Land, capital, labor, and entrepreneurs do not move to markets where returns are highest, they stay put and may be unemployed.
- Public Goods: are goods or services whose benefits are available to everyone and are paid for collectively. Examples: uncrowned highways, national defense, flood control measures, and police and fire protection.
- Externalities: economic side effect that neither harms nor benefits an uninvolved third party that is not involved in the activity that causes it. There is negative externality that means harmful side effect that affects an uninvolved third party because of the actions of others. Finally the positive externality is the beneficial side effect that affects an uninvolved third party.
WeLComE SuPEr SeNiORs!!!
Welcome to the CISS Economics website. . .
This site is designed to help you prepare for your semester exam. At the right, you'll notice links to your classmates' notes. The selected topics serve as a collective outline of essential information you'll want to focus on as you review. At the right, you'll also notice "Economics Resources," which contains, among other links, a link to the Glencoe textbook website with activities and practice quizzes.
You can also find a complete copy of all the notes passed out in class here.
Please do not hestitate to send me an email with any questions or suggestions. . .
vicklauren@gmail.com
Best of luck as you study!
This site is designed to help you prepare for your semester exam. At the right, you'll notice links to your classmates' notes. The selected topics serve as a collective outline of essential information you'll want to focus on as you review. At the right, you'll also notice "Economics Resources," which contains, among other links, a link to the Glencoe textbook website with activities and practice quizzes.
You can also find a complete copy of all the notes passed out in class here.
Please do not hestitate to send me an email with any questions or suggestions. . .
vicklauren@gmail.com
Best of luck as you study!
Help Make A Difference
Here are a few ways YOU can help make a REAL difference. . .
*Use GoodSearch to do your homework and surf the web. It is a search engine powered by Yahoo! that raises a 1.3 cents for your favorite charity every time you search the web. Download the toolbar so you can HELP OUT every time you use the Internet. Pick your favorite charity (there are more than 100,000 listed) or consider supporting Salvadoran youth who have grown up in orphanges and shelters continue their education. Select "Nuestro Ahora (Eashtampton, MA)."
*Use GoodShop or OneCause if you shop online. Enter your favorite store or website from either page, and they will donate a percentage of the sales to your favorite cause. Again, you can select from among your favorite charities or support "Nuestro Ahora, Inc."
*If you use Facebook, join some "Causes." Even without directly donating any money, by joining a group you help that group increase its membership, which helps your cause win support (and maybe even some funding) from Facebook. In addition, you help raise awareness for your cause among your Facebook friends. Many of the documentaries we've seen in class have "Causes" pages. . .look for "Invisible Children" among others. To support Nuestro Ahora, join "Help Orphans Study."
*Increase your SAT vocabulary using FreeRice which helps you build your verbal power while donating 20 grains of rice to the UN World Food Program operations for each term you learn.
Suggestions?? Please send them to me at vicklauren@gmail.com.
*Use GoodSearch to do your homework and surf the web. It is a search engine powered by Yahoo! that raises a 1.3 cents for your favorite charity every time you search the web. Download the toolbar so you can HELP OUT every time you use the Internet. Pick your favorite charity (there are more than 100,000 listed) or consider supporting Salvadoran youth who have grown up in orphanges and shelters continue their education. Select "Nuestro Ahora (Eashtampton, MA)."
*Use GoodShop or OneCause if you shop online. Enter your favorite store or website from either page, and they will donate a percentage of the sales to your favorite cause. Again, you can select from among your favorite charities or support "Nuestro Ahora, Inc."
*If you use Facebook, join some "Causes." Even without directly donating any money, by joining a group you help that group increase its membership, which helps your cause win support (and maybe even some funding) from Facebook. In addition, you help raise awareness for your cause among your Facebook friends. Many of the documentaries we've seen in class have "Causes" pages. . .look for "Invisible Children" among others. To support Nuestro Ahora, join "Help Orphans Study."
*Increase your SAT vocabulary using FreeRice which helps you build your verbal power while donating 20 grains of rice to the UN World Food Program operations for each term you learn.
Suggestions?? Please send them to me at vicklauren@gmail.com.
Conglomerates, Multinationals, & Mergers
Notes by Israel
Conglomerates: Is a firm that has more or 4 businesses, each making a different product. Each of does business isn’t responsible for the majority of the firm’s sales.
Ex: sonny
Multinational: it’s a corporation that has manufacturing or service operation in more than one location.
Ex: mc Donald
Horizontal merge: combination of two or more firms producing the same kind of product.
Vertical merge: combination of firms involved in different stages of manufacture or marketing.
Collusion: agreement, usually illegal, among producers to fix prices, limit output, or divide markets.
Conglomerates: Is a firm that has more or 4 businesses, each making a different product. Each of does business isn’t responsible for the majority of the firm’s sales.
Ex: sonny
Multinational: it’s a corporation that has manufacturing or service operation in more than one location.
Ex: mc Donald
Horizontal merge: combination of two or more firms producing the same kind of product.
Vertical merge: combination of firms involved in different stages of manufacture or marketing.
Collusion: agreement, usually illegal, among producers to fix prices, limit output, or divide markets.
Productivity, Trade-Offs, & Opportunity Cost
Notes by Stephanie
-Productivity: is a measure of the amount of goods and services produced with certain amount of resources.
-Productivity occurs when scarce resources are used efficiently.
-It goes when more output is produced with the same amount of resources.
-Trade-offs: are alternative choices people face when making a decision.
- To evaluate choices people may use a decision-making grid to list alternatives and criteria they may have.
-An example can be when a boy has to decide whether to buy a video game, a MP3 player, or a concert ticket. He can use a decision-making-grid to consider all his alternatives and evaluate his choices.
-Opportunity Cost: is the cost of the next-best alternative or choice a person may have when making a choice.
-Opportunity cost may be used for time, money, or resources.
-An example can be that a boy decided to buy a video game by giving up his opportunity cost that was the MP3 player.
-Productivity: is a measure of the amount of goods and services produced with certain amount of resources.
-Productivity occurs when scarce resources are used efficiently.
-It goes when more output is produced with the same amount of resources.
-Trade-offs: are alternative choices people face when making a decision.
- To evaluate choices people may use a decision-making grid to list alternatives and criteria they may have.
-An example can be when a boy has to decide whether to buy a video game, a MP3 player, or a concert ticket. He can use a decision-making-grid to consider all his alternatives and evaluate his choices.
-Opportunity Cost: is the cost of the next-best alternative or choice a person may have when making a choice.
-Opportunity cost may be used for time, money, or resources.
-An example can be that a boy decided to buy a video game by giving up his opportunity cost that was the MP3 player.
Production Possibilites & Cost-Benefit Analysis
Notes by Sophia
• Production possibilities frontier
o Definition: Diagram representing various combinations of goods and services an economy can produce when all its resources are in use.
o The producer can choose which products to produce and the amounts of each.
o The diagram indicates the maximum combinations of goods and services that can be produced.
o If some resources are not fully employed the producer will never reach its maximum potential production.
o The production possibilities frontier represents potential output at a given point in time.
o Factors that can cause a production possibilities frontier to expand:
Population growth
Expansion of stock capital
Technological improvements
Increase of productivity
o Outward movement of the production possibilities frontier indicates economic growth
• Cost-Benefit Analysis
o Definition: way of thinking about a choice that compares the cost of an action an action to its benefits.
o Businesses choose to invest in projects that have the best cost-benefit ratio.
o The highest the benefit for the lowest cost indicates a better option for investment.
• Production possibilities frontier
o Definition: Diagram representing various combinations of goods and services an economy can produce when all its resources are in use.
o The producer can choose which products to produce and the amounts of each.
o The diagram indicates the maximum combinations of goods and services that can be produced.
o If some resources are not fully employed the producer will never reach its maximum potential production.
o The production possibilities frontier represents potential output at a given point in time.
o Factors that can cause a production possibilities frontier to expand:
Population growth
Expansion of stock capital
Technological improvements
Increase of productivity
o Outward movement of the production possibilities frontier indicates economic growth
• Cost-Benefit Analysis
o Definition: way of thinking about a choice that compares the cost of an action an action to its benefits.
o Businesses choose to invest in projects that have the best cost-benefit ratio.
o The highest the benefit for the lowest cost indicates a better option for investment.
Price Ceilings & Price Floors
Notes by Rafael
“Price ceiling is a measure to ensure economic security and equity by setting a highest legal price for a product.” For example for needs like water, electricity, there needs to be a top price so everyone can afford the product and the resources are allocated better.
Pg 157
“Price floor is another measure to ensure economic security and equity by setting a lowest legal price for a product or service.” For example the minimum wage paid to workers. Pg 158
“Laissez-faire is a French term that means “allow them to do” which implies that there is an economic freedom to act and the government’s authority in this liberty is not that strict.” Pg 169
“Price ceiling is a measure to ensure economic security and equity by setting a highest legal price for a product.” For example for needs like water, electricity, there needs to be a top price so everyone can afford the product and the resources are allocated better.
Pg 157
“Price floor is another measure to ensure economic security and equity by setting a lowest legal price for a product or service.” For example the minimum wage paid to workers. Pg 158
“Laissez-faire is a French term that means “allow them to do” which implies that there is an economic freedom to act and the government’s authority in this liberty is not that strict.” Pg 169
Investment Markets
Notes by Oswaldo
Capital market, money market, mutual funds, primary/ secondary markets)
-Capital market: money is loaned and/or borrowed for more than a year.
Money market: money is loaned and/or borrowed for less than a year.
-Mutual funds: company that sells stocks in itself and uses the profits to buy stocks and bonds issued by other companies.
-Primary markets: market in which only the original issuer can sell or repurchase a financial asset. (loan is directed between government and investor)
-Secondary markets: market in which financial assets can be sold to someone other
than the original issuer. (bond can be sold over and over. Traded b/w investors)
Capital market, money market, mutual funds, primary/ secondary markets)
-Capital market: money is loaned and/or borrowed for more than a year.
Money market: money is loaned and/or borrowed for less than a year.
-Mutual funds: company that sells stocks in itself and uses the profits to buy stocks and bonds issued by other companies.
-Primary markets: market in which only the original issuer can sell or repurchase a financial asset. (loan is directed between government and investor)
-Secondary markets: market in which financial assets can be sold to someone other
than the original issuer. (bond can be sold over and over. Traded b/w investors)
Demand
Notes by Konny
Demand Schedule: Table showing the relationship between price and quantity. The demand schedule is used by economists to see the amount of a product that a consumer would be willing to buy from a wide variety of prices.
Law of Demand: states that consumers would buy more of a product at a lower price and less of a product at a higher price, a simple observation, such as a sale proves this law to be correct. For example, when stores have sales people tend to buy more of everything.
Market Demand Curve: The Demand Schedule can be illustrated graphically with connected dots to form the curve. A demand schedule and the demand curve show the same information differently. One uses a table while the other in the form of a graph.
Changes in Demand: Changes in demand occurs when there is a shift of the demand curve as people buy different amounts at every price. If the shift is to the right it shows an increase in demand; to the left a decrease.
Demand Schedule: Table showing the relationship between price and quantity. The demand schedule is used by economists to see the amount of a product that a consumer would be willing to buy from a wide variety of prices.
Law of Demand: states that consumers would buy more of a product at a lower price and less of a product at a higher price, a simple observation, such as a sale proves this law to be correct. For example, when stores have sales people tend to buy more of everything.
Market Demand Curve: The Demand Schedule can be illustrated graphically with connected dots to form the curve. A demand schedule and the demand curve show the same information differently. One uses a table while the other in the form of a graph.
Changes in Demand: Changes in demand occurs when there is a shift of the demand curve as people buy different amounts at every price. If the shift is to the right it shows an increase in demand; to the left a decrease.
Supply
Notes by Julio
Law of Supply: rule that states that a producer will provide more products when prices are high, than what he will offer when profits are low. When prices are high, producers will be more prone to offer more products in a hope for a greater profit.
Supply Schedule: a table that lists the quantity supplied at all possible prices in the market. Unlike demand, when the prices are high, the supply is also high.
Supply Curve: it is a representation of the supply schedule in the form of a graph that also shows the quantity supplied at all possible prices in the market at any time. Its curve is normally positive, from the lower left hand corner to the upper right hand corner of the graph.
Change in Supply: it is a change in the quantity that a producer offers due to a change in the price. Producers will vary the quantity supplied depending on the prices in the market; and the interaction of supply and demand will set the prices of products.
Law of Supply: rule that states that a producer will provide more products when prices are high, than what he will offer when profits are low. When prices are high, producers will be more prone to offer more products in a hope for a greater profit.
Supply Schedule: a table that lists the quantity supplied at all possible prices in the market. Unlike demand, when the prices are high, the supply is also high.
Supply Curve: it is a representation of the supply schedule in the form of a graph that also shows the quantity supplied at all possible prices in the market at any time. Its curve is normally positive, from the lower left hand corner to the upper right hand corner of the graph.
Change in Supply: it is a change in the quantity that a producer offers due to a change in the price. Producers will vary the quantity supplied depending on the prices in the market; and the interaction of supply and demand will set the prices of products.
Non-profits, Co-ops, Credit Unions, etc.
Notes by Denisse
1.Nonprofit organization: Economic organization that operates like a business but does not seek financial gain.
· Works in a businesslike way to promote the collective interests of its members rather than to seek financial gain for its owners.
2. Co-up or cooperative: A voluntary association formed to carry on some kind of economic activity that will benefit its members. Co-ups can have a variety of goals. They fall into three major categories: consumer, service, and producer.
· Consumer co-up: A voluntary association that buys bulk amounts of goods such as food or clothing on behalf of its members.
· Service co-up: Provides services such as insurance, credit, or child care to its members rather than goods.
· Producer co-ups: helps members promote or sell their products.
3. Credit union: A financial organization that accepts deposits from, and makes loans to, employees of a particular company or government agency.
4. Labor unions: An organization of workers formed to represent its members’ interests in various employment matters.
· The union participates in collective bargaining when it negotiates with management over issues such as play, working hours, healthcare coverage, vacations, and other job- related matters.
· Unions also lobby for laws that will benefit and protect their workers.
· Largest labor union in the United States: the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO).
4. Chamber of commerce: A nonprofit organization of local businesses formed to promote their interests.
· The typical chamber sponsors activities ranging from educational programs to lobbying for favorable business legislation.
5. Professional association: Nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perception of its profession. Ex. The American Medical Association (AMA).
1.Nonprofit organization: Economic organization that operates like a business but does not seek financial gain.
· Works in a businesslike way to promote the collective interests of its members rather than to seek financial gain for its owners.
2. Co-up or cooperative: A voluntary association formed to carry on some kind of economic activity that will benefit its members. Co-ups can have a variety of goals. They fall into three major categories: consumer, service, and producer.
· Consumer co-up: A voluntary association that buys bulk amounts of goods such as food or clothing on behalf of its members.
· Service co-up: Provides services such as insurance, credit, or child care to its members rather than goods.
· Producer co-ups: helps members promote or sell their products.
3. Credit union: A financial organization that accepts deposits from, and makes loans to, employees of a particular company or government agency.
4. Labor unions: An organization of workers formed to represent its members’ interests in various employment matters.
· The union participates in collective bargaining when it negotiates with management over issues such as play, working hours, healthcare coverage, vacations, and other job- related matters.
· Unions also lobby for laws that will benefit and protect their workers.
· Largest labor union in the United States: the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO).
4. Chamber of commerce: A nonprofit organization of local businesses formed to promote their interests.
· The typical chamber sponsors activities ranging from educational programs to lobbying for favorable business legislation.
5. Professional association: Nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perception of its profession. Ex. The American Medical Association (AMA).
Free Enterprise
Notes by Ale
Free enterprise: capitalistic economy in which competition is allowed to flourish with a minimum of government interference. In other words is the unhindered use of privately owned resources to earn profits, this is different than capitalism because capitalism stands for the private ownership of resources. It is less regulated.
Characteristics:
· Private property rights: people may control their possessions as they wish. Gives people the incentive to work, save, and invest. They can keep any rewards they earn. Ex: copyrights, trademarks, etc.
· Profit motive: people and organizations may improve their material well-being by making money. It is the responsible characteristics that make a free enterprise system grow. If they do well they can earn a lot. If it goes wrong they can loose part of their investment.
Free enterprise: capitalistic economy in which competition is allowed to flourish with a minimum of government interference. In other words is the unhindered use of privately owned resources to earn profits, this is different than capitalism because capitalism stands for the private ownership of resources. It is less regulated.
Characteristics:
· Private property rights: people may control their possessions as they wish. Gives people the incentive to work, save, and invest. They can keep any rewards they earn. Ex: copyrights, trademarks, etc.
· Profit motive: people and organizations may improve their material well-being by making money. It is the responsible characteristics that make a free enterprise system grow. If they do well they can earn a lot. If it goes wrong they can loose part of their investment.
Wages & Labor Disputes
Notes by Sasha
Determining Wages:
Skill Levels:
1. Unskilled Level: Not trained for machines and equipment
2. Semiskilled level: operate machines with minimum training.
3. Skilled labor: trained and need little supervision
4. Professional labor: a lot of training, education and skills.
Theories:
1. Market theory: rely on supply and demand.
2. Negotiated Theory: based on bargaining strength of organized labor.
3. Signaling theory: employers pay more for highly educated people.
How to resolve Labor disputes:
Resolution:
1. Collective bargaining: negotiation between labor and management over pay, benefits, working hours, etc.
2. Mediation: bring in neutral 3rd party to resolve disputes.
3. Arbitration: both sides/parties agree to place disputes before 3rd party which make the final decision.
4. Fact-Finding: 3rd party collects facts about dispute and gives recommendations.
Determining Wages:
Skill Levels:
1. Unskilled Level: Not trained for machines and equipment
2. Semiskilled level: operate machines with minimum training.
3. Skilled labor: trained and need little supervision
4. Professional labor: a lot of training, education and skills.
Theories:
1. Market theory: rely on supply and demand.
2. Negotiated Theory: based on bargaining strength of organized labor.
3. Signaling theory: employers pay more for highly educated people.
How to resolve Labor disputes:
Resolution:
1. Collective bargaining: negotiation between labor and management over pay, benefits, working hours, etc.
2. Mediation: bring in neutral 3rd party to resolve disputes.
3. Arbitration: both sides/parties agree to place disputes before 3rd party which make the final decision.
4. Fact-Finding: 3rd party collects facts about dispute and gives recommendations.
Marginal Cost & Analysis
Notes by Rudy
· Short run- small amount of time in which only one input can be changed.
· Long run- long period of time when multiple input variables can be changed.
· Total product- how many products are made.
· Total cost- sum of fixed and variable costs, or how much is the cost of production.
· Marginal product- the change in output that results from adding one more input.
· Marginal cost- the change in cost that results from producing one more unit of output.
· Break-even point- when total cost equals total revenue.
· Stages of Production
o Increasing marginal returns- marginal product increases. Has a big, positive slope.
o Decreasing marginal returns- marginal product decreases. Has a smaller, positive slope.
o Negative marginal returns- marginal product is negative. Has a negative slope.
· Short run- small amount of time in which only one input can be changed.
· Long run- long period of time when multiple input variables can be changed.
· Total product- how many products are made.
· Total cost- sum of fixed and variable costs, or how much is the cost of production.
· Marginal product- the change in output that results from adding one more input.
· Marginal cost- the change in cost that results from producing one more unit of output.
· Break-even point- when total cost equals total revenue.
· Stages of Production
o Increasing marginal returns- marginal product increases. Has a big, positive slope.
o Decreasing marginal returns- marginal product decreases. Has a smaller, positive slope.
o Negative marginal returns- marginal product is negative. Has a negative slope.
Monopoly, Oligopoly, Perfect Competition, Monopolistic Competition
Notes by Reinaldo
A monopoly is “a market structure with only one seller of a particular product.”(175)
There are 4 types of monopolies:
· Natural monopoly is “a market situation where the costs of production are minimized by having a single firm produce the product.”(176) Example: telephone companies, public utility companies, etc.
· Geographic monopoly is a monopoly “based on the absence of other sellers in a certain geographic area.”(176) Example: gas stations
· Technological monopoly is a monopoly “that is based on ownership or control of a manufacturing method, process, or other scientific advance.”(176)
· Government monopoly is a monopoly “owned and operated by the government.”(177)
An oligopoly is a “market structure in which a few very large sellers dominate the industry.”(174) The products have different features, or it may be standardized.
A. Interdependent Behavior
A.1. Collusion: “A formal agreement to set specific prices or to otherwise behave in a cooperative manner.”(174)
A.2. Price-fixing: “Agreement to charge the same prices for a product.”(175)
Perfect competition: “It is a market structure characterized by a large number of well informed independent buyers and sellers who exchange identical products.”(170)
· Imperfect competition
Monopolistic competition: “It is a market structure that has all the conditions of perfect competition except for identical products.”(173)
· Product differentiation
· Nonprice competition
There are 4 types of monopolies:
· Natural monopoly is “a market situation where the costs of production are minimized by having a single firm produce the product.”(176) Example: telephone companies, public utility companies, etc.
· Geographic monopoly is a monopoly “based on the absence of other sellers in a certain geographic area.”(176) Example: gas stations
· Technological monopoly is a monopoly “that is based on ownership or control of a manufacturing method, process, or other scientific advance.”(176)
· Government monopoly is a monopoly “owned and operated by the government.”(177)
An oligopoly is a “market structure in which a few very large sellers dominate the industry.”(174) The products have different features, or it may be standardized.
A. Interdependent Behavior
A.1. Collusion: “A formal agreement to set specific prices or to otherwise behave in a cooperative manner.”(174)
A.2. Price-fixing: “Agreement to charge the same prices for a product.”(175)
Perfect competition: “It is a market structure characterized by a large number of well informed independent buyers and sellers who exchange identical products.”(170)
· Imperfect competition
Monopolistic competition: “It is a market structure that has all the conditions of perfect competition except for identical products.”(173)
· Product differentiation
· Nonprice competition
The Stock Exchange
Notes by Patricio
Equities- stocks that represent ownership shares in corporations.
Stockbroker- person who buys or sells securities for investors.
Stock exchange- A place where buyers and sellers meet to trade stocks.
Mutual fund- company that sells stocks in itself and uses the proceeds to buy stocks and bonds issued by other companies.
401(k)- tax deferred investment and savings pan that acts as a personal fund for employers.
Investors can purchase stocks through stockbrokers on exchanges, through mutual funds or 401(k) plans. There are different markets where people can buy or trade stocks. An over-the-counter market (OTC) is an electronic market place for securities not listed on organized exchanges such as the NYSE. The most important one is the NASDAQ, the world’s largest electronic market. For any concern that the investors might have, 2 popular indicators can be consulted, DJIA and S&P500. Usually when the indicators go up, the general stocks go up and when they go down, stocks go down. Investors use different terms to describe the markets. A‘‘bull market’’ is a strong market with prices moving up for several months or years in a row and a ‘‘bear market’’, is a market with the prices of equities falling sharply for several months or years in a row.
Equities- stocks that represent ownership shares in corporations.
Stockbroker- person who buys or sells securities for investors.
Stock exchange- A place where buyers and sellers meet to trade stocks.
Mutual fund- company that sells stocks in itself and uses the proceeds to buy stocks and bonds issued by other companies.
401(k)- tax deferred investment and savings pan that acts as a personal fund for employers.
Investors can purchase stocks through stockbrokers on exchanges, through mutual funds or 401(k) plans. There are different markets where people can buy or trade stocks. An over-the-counter market (OTC) is an electronic market place for securities not listed on organized exchanges such as the NYSE. The most important one is the NASDAQ, the world’s largest electronic market. For any concern that the investors might have, 2 popular indicators can be consulted, DJIA and S&P500. Usually when the indicators go up, the general stocks go up and when they go down, stocks go down. Investors use different terms to describe the markets. A‘‘bull market’’ is a strong market with prices moving up for several months or years in a row and a ‘‘bear market’’, is a market with the prices of equities falling sharply for several months or years in a row.
Elasticity
Notes by Navid
a- At $3 only 2 units are demanded.
b- At $2 only 5 units are demanded. The price decreases by one-third, the demand more than doubles.
a- At $3, 2 units are demanded.
b- At $2, 2.5 units are demanded. The price decreases by one-third, the demand only increased by 25 percent.
- Much more steep line.
Unit Elastic: a category of elasticity where a change in one variable (usually price) bring about a proportional or equal change in the other variable (usually demand).
For example: it is very hard to locate an example of unit elastic because the demand for most goods is either elastic or inelastic. This category serves more as a “middle ground that separates the other two categories.” (Glencoe Economics, page 105)
Elasticity: a measurement of how much one variable changes due to a change in another variable.
Elastic: category of elasticity where a change in one variable (usually price) brings about a relatively greater change in the other variable (usually demand).
a) For example: fresh garden vegetables. During winter time these products’ prices go higher which causes a relatively large decrease in demand; this happens the other way around during summer time.
a) For example: fresh garden vegetables. During winter time these products’ prices go higher which causes a relatively large decrease in demand; this happens the other way around during summer time.
a- At $3 only 2 units are demanded.
b- At $2 only 5 units are demanded. The price decreases by one-third, the demand more than doubles.
-Much less steep line
Inelastic: category of elasticity where a change in one variable (usually price) bring about a relatively slighter change in the other variable (usually demand).
a) For example: table salt; a decrease or increase in the price of this product will not create a change on how much people demand for it.
a) For example: table salt; a decrease or increase in the price of this product will not create a change on how much people demand for it.
a- At $3, 2 units are demanded.
b- At $2, 2.5 units are demanded. The price decreases by one-third, the demand only increased by 25 percent.
- Much more steep line.
Unit Elastic: a category of elasticity where a change in one variable (usually price) bring about a proportional or equal change in the other variable (usually demand).
For example: it is very hard to locate an example of unit elastic because the demand for most goods is either elastic or inelastic. This category serves more as a “middle ground that separates the other two categories.” (Glencoe Economics, page 105)
At $3, 2 units are demanded.
At $2, 3 units are demanded. The price decreases by one-third and the demand increases by one-third.
At $2, 3 units are demanded. The price decreases by one-third and the demand increases by one-third.
-Average steep line
Elasticity Formula: (Percent change in quantity demanded)/(Percent change in price). If the answer is greater than 1, it is elastic; less than 1, inelastic; and 1, unit elastic.
Bonds
Notes by Michael
20. Bonds, principle, interest, bond type
• Bond- a formal contract to repay borrowed money with interest.
• Principal- Amount borrowed when getting a loan or issuing a bond.
• Interest-Payment made for the use of borrowed money.
• Bond types:
-Corporate bonds: They are an important source of corporate bonds, are for long-term investment and can be quickly sold. Investors decide on the highest level of risk willing to accept and then they find a bond that has the best current yield.
• Junk Bonds- bond that carries exceptionally high risk of nonpayment and a low rating.
-Municipal Bonds: bond, often tea exempt, issued by state and local governments. They help finance highways, public works and state buildings. They are regarded as safe investment, don’t go out of business and are generally presumed that in the future they will be able to pay interest and principal for any bonds they have issued.
• Tax –exempt: not subject to tax by federal or state governments.
-Government saving bonds: Generate financial assets when it sells savings bonds.
• Savings bonds- low-denomination, non-transferable bond issued by the federal government.
They can be purchased through banks and financial intermediaries. The government pays interest on these bonds, but it builds the interest into the redemption price. They are easy to obtain and there is virtually no risk of default.
• Beneficiary- person designated to take ownership [of an asset if the owner of the asset dies.
20. Bonds, principle, interest, bond type
• Bond- a formal contract to repay borrowed money with interest.
• Principal- Amount borrowed when getting a loan or issuing a bond.
• Interest-Payment made for the use of borrowed money.
• Bond types:
-Corporate bonds: They are an important source of corporate bonds, are for long-term investment and can be quickly sold. Investors decide on the highest level of risk willing to accept and then they find a bond that has the best current yield.
• Junk Bonds- bond that carries exceptionally high risk of nonpayment and a low rating.
-Municipal Bonds: bond, often tea exempt, issued by state and local governments. They help finance highways, public works and state buildings. They are regarded as safe investment, don’t go out of business and are generally presumed that in the future they will be able to pay interest and principal for any bonds they have issued.
• Tax –exempt: not subject to tax by federal or state governments.
-Government saving bonds: Generate financial assets when it sells savings bonds.
• Savings bonds- low-denomination, non-transferable bond issued by the federal government.
They can be purchased through banks and financial intermediaries. The government pays interest on these bonds, but it builds the interest into the redemption price. They are easy to obtain and there is virtually no risk of default.
• Beneficiary- person designated to take ownership [of an asset if the owner of the asset dies.
Factors & Products Market, Human Capital
Notes by Maria Fernanda
Factors Market: Is a type of market where the factors of production are bought and sold. An example is when entrepreneurs hire labor for wages and salaries, acquire land in return and borrow money.
Product Market: Is a type of market where producers sell goods and services. The money that businesses receive, use it to produce more goods and services and the cycle never stops.
Human Capital: Is the people’s abilities, knowledge, health, skills etc. Human Capital is a major contribution to any type of work. Government can invest in human capital by providing better education and health care. They may invest in other programs that improve the skills and motivation of the workers. Human Capital is the major contribution for productivity.
Factors Market: Is a type of market where the factors of production are bought and sold. An example is when entrepreneurs hire labor for wages and salaries, acquire land in return and borrow money.
Product Market: Is a type of market where producers sell goods and services. The money that businesses receive, use it to produce more goods and services and the cycle never stops.
Human Capital: Is the people’s abilities, knowledge, health, skills etc. Human Capital is a major contribution to any type of work. Government can invest in human capital by providing better education and health care. They may invest in other programs that improve the skills and motivation of the workers. Human Capital is the major contribution for productivity.
Economic Systems
Notes by Katelyn
Standard of Living: the quality of life based on the things we own to make life easier
Economic Systems:
Standard of Living: the quality of life based on the things we own to make life easier
Economic Systems:
Stocks
· Charter: people who want to form a corporation must file for permission from the government. If approved, a charter- a government document that gives permission to create a corporation- is granted.
· Stock: a certificate of ownership in a corporation.
· Common stock: is the most frequently used form of corporate ownership, with one vote per share for stockholders.
· Preferred stock: a form of corporate ownership without vote, in which stockholders get their investments back before common stockholders.
· Shareholders: people who own a share or shares of stock in a corporation.
· Stock: a certificate of ownership in a corporation.
· Common stock: is the most frequently used form of corporate ownership, with one vote per share for stockholders.
· Preferred stock: a form of corporate ownership without vote, in which stockholders get their investments back before common stockholders.
· Shareholders: people who own a share or shares of stock in a corporation.
Prices
Notes by Diana
Price: a monetary value of a product as established by supply and demand.
1. High prices signal buyers to buy less and producer to produce more.
2. Low prices signal buyers to buy more and producers to produce less.
Advantages of Prices
1. Neutral: they favor neither the producer nor consumer.
2. Flexible: prices can change due to wars, or natural disasters. Buyers and sellers can adjust to those price changes, through their consumption and production.
3. Familiar and easy to understand: most people have known about prices most of their lives. There is no ambiguity about prices. If something costs $5.99, we know what do have to pay. This allows people to decisions quickly and efficiently.
4. No administrative cost: competitive markets find their own prices without any external help.
Allocations without prices: prices help us make the everyday economic decisions that allocate scarce resources.
Rationing
Ø It is the allocation of goods and service without prices.
Ø Rationing has been used during wartime.
Ration coupon
Ø A ticket that entitles the holder to obtain a certain amount of a product.
Problems with rationing
Ø Almost everyone thinks his/her share is too small
Ø Administrative cost of rationing.
Ø Negative impact on the incentive to produce.
Price as a System
Rebate
Ø Partial refund of a product’s original price.
Ø Ex. After the increase in prices in gas, the SUV markets were greatly affected. Since this vehicles use a lot of gas, the demand decreased. Leaving the dealerships with big inventories. To move these inventories some of the producers or manufactures offered consumers rebates. It was just as a temporary price reduction, because buyers were offered thousand of dollars back for every car they bought. (p.146)
Price: a monetary value of a product as established by supply and demand.
1. High prices signal buyers to buy less and producer to produce more.
2. Low prices signal buyers to buy more and producers to produce less.
Advantages of Prices
1. Neutral: they favor neither the producer nor consumer.
2. Flexible: prices can change due to wars, or natural disasters. Buyers and sellers can adjust to those price changes, through their consumption and production.
3. Familiar and easy to understand: most people have known about prices most of their lives. There is no ambiguity about prices. If something costs $5.99, we know what do have to pay. This allows people to decisions quickly and efficiently.
4. No administrative cost: competitive markets find their own prices without any external help.
Allocations without prices: prices help us make the everyday economic decisions that allocate scarce resources.
Rationing
Ø It is the allocation of goods and service without prices.
Ø Rationing has been used during wartime.
Ration coupon
Ø A ticket that entitles the holder to obtain a certain amount of a product.
Problems with rationing
Ø Almost everyone thinks his/her share is too small
Ø Administrative cost of rationing.
Ø Negative impact on the incentive to produce.
Price as a System
Rebate
Ø Partial refund of a product’s original price.
Ø Ex. After the increase in prices in gas, the SUV markets were greatly affected. Since this vehicles use a lot of gas, the demand decreased. Leaving the dealerships with big inventories. To move these inventories some of the producers or manufactures offered consumers rebates. It was just as a temporary price reduction, because buyers were offered thousand of dollars back for every car they bought. (p.146)
Goods & Services
Notes by Danny
Values: The monetary value of a good or a service the market puts on it.
Ex: Videos games, food, clothing, etc.
Utility: Something of value that can be useful and also provide satisfaction. Utility can also vary from one person to another.
Ex: One person may like a bike to ride; and the other person may not like bikes.
Durable goods: Any good that can last three or more years when used with regularity.
Ex: Cars, computers, Florescent light bulbs, etc.
Service: Work that is done by someone to another person.
Ex: A Lawyer, Nurse, Electrician, etc.
Values: The monetary value of a good or a service the market puts on it.
Ex: Videos games, food, clothing, etc.
Utility: Something of value that can be useful and also provide satisfaction. Utility can also vary from one person to another.
Ex: One person may like a bike to ride; and the other person may not like bikes.
Durable goods: Any good that can last three or more years when used with regularity.
Ex: Cars, computers, Florescent light bulbs, etc.
Service: Work that is done by someone to another person.
Ex: A Lawyer, Nurse, Electrician, etc.
Inflation & Adjustment
Notes by Andy
Inflation: rise in prices.
Fixed income: income that stays the same even when inflation occurs.
Current dollars vs real dollars: prices that have not been adjusted for inflation vs prices that have been adjusted for inflation.
Base year: year that serves as comparison for other years in a statistical measure.
Minimum wage: lowest possible legal pay, that can be paid to most workers.
Inflation: rise in prices.
Fixed income: income that stays the same even when inflation occurs.
Current dollars vs real dollars: prices that have not been adjusted for inflation vs prices that have been adjusted for inflation.
Base year: year that serves as comparison for other years in a statistical measure.
Minimum wage: lowest possible legal pay, that can be paid to most workers.
Macro & Microeconomics & the 3 Big Questions
Notes by Ana
- Economics: study of how people try to satisfy seemingly unlimited and competing wants through the careful use or relatively scarce resources.
o Microeconomics: deals with behavior and decision making by small units such as individuals and firms.
o Macroeconomics: deals with the economy as a whole and decision making by large units such as governments and unions.
- Scarcity: condition in which there is a lack of resources to produce things that people need or want.
- 4 Factors of Production
o Land: “gifts of nature.” Natural resources, for example deserts, forests, livestock, and climate (limited supply).
o Capital: tools, equipment, and factories used in production.
o Labor: people that offer their skills, abilities, and efforts.
o Entrepreneurs: “innovators.” Driving force of the economy uses resources to create something new.
- 3 Basic Questions
o WHAT to produce: society cannot have everything its people want.
o HOW to produce: see which method is lower in cost so that the items are less expensive, which could be more affordable.
o FOR WHOM to produce: society must decide who will receive the things produced.
(ANSWERED ONLY WHEN THERE ARE NOT ENOUGH RESOURCES TO SATISFY PEOPLE’S UNLIMITED WANTS AND NEEDS)
- Economics: study of how people try to satisfy seemingly unlimited and competing wants through the careful use or relatively scarce resources.
o Microeconomics: deals with behavior and decision making by small units such as individuals and firms.
o Macroeconomics: deals with the economy as a whole and decision making by large units such as governments and unions.
- Scarcity: condition in which there is a lack of resources to produce things that people need or want.
- 4 Factors of Production
o Land: “gifts of nature.” Natural resources, for example deserts, forests, livestock, and climate (limited supply).
o Capital: tools, equipment, and factories used in production.
o Labor: people that offer their skills, abilities, and efforts.
o Entrepreneurs: “innovators.” Driving force of the economy uses resources to create something new.
- 3 Basic Questions
o WHAT to produce: society cannot have everything its people want.
o HOW to produce: see which method is lower in cost so that the items are less expensive, which could be more affordable.
o FOR WHOM to produce: society must decide who will receive the things produced.
(ANSWERED ONLY WHEN THERE ARE NOT ENOUGH RESOURCES TO SATISFY PEOPLE’S UNLIMITED WANTS AND NEEDS)
The Labor Movement
Notes by Adriana
· After the Civil War, prices were higher and there was a greater demand for goods and services, which made labor force more unified.
· Labor movement was an organization of working people to fight for their own interest.
· Unions are important because they play a major role in creating legislation. They were first created to help workers negotiate and obtain better and higher pay, hours and working conditions.
· Labor unions were formed to help workers get organized and bargain for their needs and rights. Workers created unions because groups have more bargaining power than individuals. When large groups of employees make joint decisions, employers are forced to listen to their concerns.
· There were several things worker did if an agreement was not reached.
a) Strike- they would not work until some demands were met.
b) Picket- they would march in front of a company or business to protest certain actions the company did not meet.
c) Boycott- they refused to buy products from a certain company or employer.
· There were also several ways in which employers fought unions.a) Lockout- which was the same concept of the strike but instead of the employees would not allow employers to work.
b) Company unions- unions organized by employers to fight off the efforts of the workers.
· The Great Depression- the worst period of economic decline in US history. It began in October 1929 and ended approximately in 1939. In this time period, many people were unemployed, so Congress decided to pass laws to support organize labor.
· At the same time, states passed laws to limit the power of unions. This caused even more unemployment because workers were not allowed to join the unions.
· The American Federation of Labor (AFL) first began in 1886 as an organization of trade unions. It later added several industrial unions which caused conflicts and disagreements about future union movements. The caused AFL to separate into 2 different groups. Then, the Congress of Industrial Organization (CIO) was created. As it grew stronger, it began to challenge AFL, which later joined to become the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO.) Later on, around 2005, AFL-CIO broke up because they started having disputed about the best way to spend union funds.
· Independent unions, unions that did not belong to the AFL-CIO, were also important in the labor movement.
· There were several kinds of union arrangements:
a) Closed shop- agreement in which a worker was forced to join a union before they get hired.
b) Union shop- agreement in which workers had to join a union after they were hired.
c) Modified union shop- workers had the option to join or not.
d) Agency shop- does not require a worker to join a union to keep or get a job.
· There are millions of people that are still part of unions. Even though there is gap between different groups in the US, it has become lower every year. Statistics show that more women, old people and African Americans are more likely to join unions than any other group.
· Unions have been a great part of labor movement which has been changing throughout the years. Unions started to rise due to the different acts or laws passed by Congress, but started to decline for various reasons. Some of these reasons include: the increase of part-time workers, the rise in the number of women in the workforce, and the expansion of service industries, among others.
· After the Civil War, prices were higher and there was a greater demand for goods and services, which made labor force more unified.
· Labor movement was an organization of working people to fight for their own interest.
· Unions are important because they play a major role in creating legislation. They were first created to help workers negotiate and obtain better and higher pay, hours and working conditions.
· Labor unions were formed to help workers get organized and bargain for their needs and rights. Workers created unions because groups have more bargaining power than individuals. When large groups of employees make joint decisions, employers are forced to listen to their concerns.
· There were several things worker did if an agreement was not reached.
a) Strike- they would not work until some demands were met.
b) Picket- they would march in front of a company or business to protest certain actions the company did not meet.
c) Boycott- they refused to buy products from a certain company or employer.
· There were also several ways in which employers fought unions.a) Lockout- which was the same concept of the strike but instead of the employees would not allow employers to work.
b) Company unions- unions organized by employers to fight off the efforts of the workers.
· The Great Depression- the worst period of economic decline in US history. It began in October 1929 and ended approximately in 1939. In this time period, many people were unemployed, so Congress decided to pass laws to support organize labor.
· At the same time, states passed laws to limit the power of unions. This caused even more unemployment because workers were not allowed to join the unions.
· The American Federation of Labor (AFL) first began in 1886 as an organization of trade unions. It later added several industrial unions which caused conflicts and disagreements about future union movements. The caused AFL to separate into 2 different groups. Then, the Congress of Industrial Organization (CIO) was created. As it grew stronger, it began to challenge AFL, which later joined to become the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO.) Later on, around 2005, AFL-CIO broke up because they started having disputed about the best way to spend union funds.
· Independent unions, unions that did not belong to the AFL-CIO, were also important in the labor movement.
· There were several kinds of union arrangements:
a) Closed shop- agreement in which a worker was forced to join a union before they get hired.
b) Union shop- agreement in which workers had to join a union after they were hired.
c) Modified union shop- workers had the option to join or not.
d) Agency shop- does not require a worker to join a union to keep or get a job.
· There are millions of people that are still part of unions. Even though there is gap between different groups in the US, it has become lower every year. Statistics show that more women, old people and African Americans are more likely to join unions than any other group.
· Unions have been a great part of labor movement which has been changing throughout the years. Unions started to rise due to the different acts or laws passed by Congress, but started to decline for various reasons. Some of these reasons include: the increase of part-time workers, the rise in the number of women in the workforce, and the expansion of service industries, among others.
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