* Profit Motive
* Why people engage in free enterprise (make $$)
* Open Opportunity
* anyone can compete/get in the game
* Economic Rights
* Legal equality (all get treated the same)
* Property rights
* Free Contract
* Voluntary exchange (decided what to buy and sell)
* Competition (multiple sellers)
* The purpose of free enterprsie is to get consumers to make economic choices
* How do companies know what to produce?
* Interest groups
Govt’s Role is
* Protecting Health, Safety, and Well-being
* Restrictions keep the consumers and the market safe
* Environmental restrictions on the disposal of hazardous materials
* Public Interest
* The concerns of the public as a whole
The Business Cycle
* A period of macro economic expansion followed by a period of contraction
*Government actions try to limit fluctuations
3 Ways to Stabilize:
1) Employment
nGovernment attempts to provide jobs
(the Great Depression and the TVA)
2) Growth
Increase the Gross Domestic Product (GDP)
Total value of all final goods and services produced in a particular economy n 3) Stable Prices
The government monitors and regulates certain institutions to attempt to keep prices stable
Governments can take actions to attempt to counter fluctuations
How Can We Increase Productivity?
Instill a higher Work Ethic
the commitment to the value of work and purposeful activity
Technology
Makes the process to produce a good or a service better
The government pushes for technological advancement because it eventually increases the national GDP.
PUBLIC GOODS
* shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers
Examples: Dams, Roads,
How are public goods funded?
Taxes
Yellowstone National Park
was created by the government
What does it cost to go there?
Little to nothing
Value
Not changed by multiple uses
*You can drive on a road thousands of others have used
Costs and Benefits
*Benefits must outweigh the costs in order for a public good to be created
* Why was the Grand Canyon Skywalk built by a Native America Tribe and not the government?
* Private Sector
* The part of the economy that involves the transactions of the government
* Public Goods are financed by the Public Sector
*Public Sector
*Part of the economy that involves transactions of individuals and businesses
* Free Rider
* Someone who wants to get the benefits of public goods without paying for a good or service
* EXAMPLE
* Building of a road privately funded
* Everyone wants it but a few people
* Result: Build the road
* Those who didn’t want it will use it and therefore become “Free riders”
Market Failures
* A situation in which the market does not distribute resources efficiently
* You cant just build roads where there are the most people because it neglects areas in need of transportation
EXTERNALITIES
* Economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
* Can be both positive and negative
How the Government deals with Externalities
* Encourage positive externalities
Limit negative externalities via regulations and things like “pollution permits”
What do you think a pollution permit is?
The Poverty Problem
*Free markets
*result in uneven distribution of resources
*Poverty Threshold
* income level below what is needed to support a family or household
The GOVERNMENTS Role
* Provide a safety net
*Welfare – the US safety net of government aid for the poor
*Created following the Great Depression
* Positive: A safety net for the poor
*Negative: Some feel people become dependint upon welfare and are unable or unwilling to get off of assistance.
Government Redistribution Programs
*CASH TRANSFERS
* Direct payments of money to people eligible poor people
1. Temporary Assitance For Needy Families
2. Social Security
3. Unemployment Insurance
4. Workers Compensation
* IN-KIND BENEFITS
Goods and services provided for free or at greatly reduced prices
Food giveaways, food stamps, subsidized housing, legal aid
*MEDICAL BENEFITS
Medicare – people over 65
Medicaid – poor who are unemployed or not employer’s insurance
* EDUCATION
Government funding for basic and advanced education
* FAITH BASED INITIATIVES
Religious organizations can qualify for federal funding as of 2003 to help the poor
Monday, August 31, 2009
AP Econ Unit II Notes part A
§Microeconomics: The study of how individual households and firms make decisions, interact with one another in markets.
§Macroeconomics: The study of the economy as a whole.
§We begin our study of macroeconomics with the country’s total income and expenditure.
§Gross Domestic Product (GDP) measures total income of everyone in the economy.
§GDP also measures total expenditure on the economy’s output of g&s.
For the economy as a whole, income equals expenditure, because every dollar a buyer spends is a dollar of income for the seller
The Circular-Flow Diagram
§a simple depiction of the macroeconomy
§illustrates GDP as spending, revenue, factor payments, and income
§Preliminaries:
•Factors of production are inputs like labor, land, capital, and natural resources.
•Factor payments are payments to the factors of production. (e.g., wages, rent)
What This Diagram Omits
§The government
•collects taxes
•purchases g&s
§The financial system
•matches savers’ supply of funds with borrowers’ demand for loans
§The foreign sector
•trades g&s, financial assets, and currencies with the country’s residents
Gross Domestic Product (GDP) Is
the market value of all final goods & services produced within a country in a given period of time.
Goods are valued at their market prices, so:
•all goods measured in the same units (e.g., dollars in the U.S.)
•Things that don’t have a market value are excluded, e.g., housework you do for yourself.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
Final goods: intended for the end user
Intermediate goods: used as components or ingredients in the production of other goods
GDP only includes final goods – they already embody the value of the intermediate goods used in their production.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
GDP includes tangible goods (like DVDs, mountain bikes, beer)
and intangible services (dry cleaning, concerts, cell phone service).
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time
GDP includes currently produced goods, not goods produced in the past.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
GDP measures the value of production that occurs within a country’s borders, whether done by its own citizens or by foreigners located there.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
usually a year or a quarter (3 months)
The Components of GDP
§Recall: GDP is total spending.
§Four components:
•Consumption (C)
•Investment (I)
•Government Purchases (G)
•Net Exports (NX)
§These components add up to GDP (denoted Y):
Y = C + I + G + NX
Consumption (C)
§is total spending by households on g&s.
§Note on housing costs:
•For renters, consumption includes rent payments.
•For homeowners, consumption includes the imputed rental value of the house, but not the purchase price or mortgage payments.
Investment (I)
§is total spending on goods that will be used in the future to produce more goods.
§includes spending on
•capital equipment (e.g., machines, tools)
•structures (factories, office buildings, houses)
•inventories (goods produced but not yet sold
Note: “Investment” does not mean the purchase of financial assets like stocks and bonds.
Government Purchases (G)
§is all spending on the g&s purchased by govt at the federal, state, and local levels.
§G excludes transfer payments, such as Social Security or unemployment insurance benefits.
They are not purchases of g&s.
Net Exports (NX)
§NX = exports – imports
§Exports represent foreign spending on the economy’s g&s.
§Imports are the portions of C, I, and G that are spent on g&s produced abroad.
§Adding up all the components of GDP gives:
Y = C + I + G + NX
Real versus Nominal GDP
§Inflation can distort economic variables like GDP, so we have two versions of GDP: One is corrected for inflation, the other is not.
§Nominal GDP values output using current prices. It is not corrected for inflation.
§Real GDP values output using the prices of a base year. Real GDP is corrected for inflation.
The GDP Deflator
§The GDP deflator is a measure of the overall level of prices.
GDP deflator = 100 x nominal/real GDP
One way to measure the economy’s inflation rate is to compute the percentage increase in the GDP deflator from one year to the next
§Real GDP per capita is the main indicator of the average person’s standard of living.
§But GDP is not a perfect measure of well-being.
§Macroeconomics: The study of the economy as a whole.
§We begin our study of macroeconomics with the country’s total income and expenditure.
§Gross Domestic Product (GDP) measures total income of everyone in the economy.
§GDP also measures total expenditure on the economy’s output of g&s.
For the economy as a whole, income equals expenditure, because every dollar a buyer spends is a dollar of income for the seller
The Circular-Flow Diagram
§a simple depiction of the macroeconomy
§illustrates GDP as spending, revenue, factor payments, and income
§Preliminaries:
•Factors of production are inputs like labor, land, capital, and natural resources.
•Factor payments are payments to the factors of production. (e.g., wages, rent)
What This Diagram Omits
§The government
•collects taxes
•purchases g&s
§The financial system
•matches savers’ supply of funds with borrowers’ demand for loans
§The foreign sector
•trades g&s, financial assets, and currencies with the country’s residents
Gross Domestic Product (GDP) Is
the market value of all final goods & services produced within a country in a given period of time.
Goods are valued at their market prices, so:
•all goods measured in the same units (e.g., dollars in the U.S.)
•Things that don’t have a market value are excluded, e.g., housework you do for yourself.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
Final goods: intended for the end user
Intermediate goods: used as components or ingredients in the production of other goods
GDP only includes final goods – they already embody the value of the intermediate goods used in their production.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
GDP includes tangible goods (like DVDs, mountain bikes, beer)
and intangible services (dry cleaning, concerts, cell phone service).
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time
GDP includes currently produced goods, not goods produced in the past.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
GDP measures the value of production that occurs within a country’s borders, whether done by its own citizens or by foreigners located there.
Gross Domestic Product (GDP) Is…
…the market value of all final goods & services produced within a country in a given period of time.
usually a year or a quarter (3 months)
The Components of GDP
§Recall: GDP is total spending.
§Four components:
•Consumption (C)
•Investment (I)
•Government Purchases (G)
•Net Exports (NX)
§These components add up to GDP (denoted Y):
Y = C + I + G + NX
Consumption (C)
§is total spending by households on g&s.
§Note on housing costs:
•For renters, consumption includes rent payments.
•For homeowners, consumption includes the imputed rental value of the house, but not the purchase price or mortgage payments.
Investment (I)
§is total spending on goods that will be used in the future to produce more goods.
§includes spending on
•capital equipment (e.g., machines, tools)
•structures (factories, office buildings, houses)
•inventories (goods produced but not yet sold
Note: “Investment” does not mean the purchase of financial assets like stocks and bonds.
Government Purchases (G)
§is all spending on the g&s purchased by govt at the federal, state, and local levels.
§G excludes transfer payments, such as Social Security or unemployment insurance benefits.
They are not purchases of g&s.
Net Exports (NX)
§NX = exports – imports
§Exports represent foreign spending on the economy’s g&s.
§Imports are the portions of C, I, and G that are spent on g&s produced abroad.
§Adding up all the components of GDP gives:
Y = C + I + G + NX
Real versus Nominal GDP
§Inflation can distort economic variables like GDP, so we have two versions of GDP: One is corrected for inflation, the other is not.
§Nominal GDP values output using current prices. It is not corrected for inflation.
§Real GDP values output using the prices of a base year. Real GDP is corrected for inflation.
The GDP Deflator
§The GDP deflator is a measure of the overall level of prices.
GDP deflator = 100 x nominal/real GDP
One way to measure the economy’s inflation rate is to compute the percentage increase in the GDP deflator from one year to the next
§Real GDP per capita is the main indicator of the average person’s standard of living.
§But GDP is not a perfect measure of well-being.
Tuesday, August 25, 2009
Honors World History Unit I test Information
Unit I test covers chapters 1-4 in your textbook. Read over all your notes and make sure you have read the chapters.
Bonus Opportunity: The First ten (10) students to bring Mr. Robinson the answers to the following questions will receive 10 bonus points on the unit test:
1) Who was Hammurabi?
2) Who was Narmer?
3) Who was Sargon I?
Bonus Opportunity: The First ten (10) students to bring Mr. Robinson the answers to the following questions will receive 10 bonus points on the unit test:
1) Who was Hammurabi?
2) Who was Narmer?
3) Who was Sargon I?
AP and honors unit I test info
Don't forget your "CHEAT SHEETS" which should include (1) the shift factors for supply and demand, and (2)the factors affecting elasticity (with the formula from your last handout)!
Bonus opportunity: The first ten (10) students to bring Mr. Robinson the answer to the following question will receive 10 bonus points on their unit test:
1. What qualifies a resource as being scarce?
2. Explain the difference between a straight line and a concave PPC.
3. What causes some PPCs to be concave--what does it tell you about the opportunity costs?
Bonus opportunity: The first ten (10) students to bring Mr. Robinson the answer to the following question will receive 10 bonus points on their unit test:
1. What qualifies a resource as being scarce?
2. Explain the difference between a straight line and a concave PPC.
3. What causes some PPCs to be concave--what does it tell you about the opportunity costs?
Monday, August 24, 2009
Attention AP and Honors Econ Students!
Unit test 1 will be this Wednesday/Thursday! 36 multiple choice questions. There will be study sessions tomorrow (Tuesday) afternoon, Wednesday Morning and afternoon, and Thursday morning. Morning sessions are 7:30-8ish, Afternoon sessions are 3:25-4:00. Hope to see you at one of these sessions!
Friday, August 21, 2009
AP Macro Notes Unit 1 Part D
Demand
Market: an institution or mechanism, which brings together buyers ("demanders") and sellers ("suppliers") of particular goods and services.
Notice that the remainder of this unit assumes a perfectly competitive market. This means that there are a large number of independently acting buyers and sellers.
Three questions the market can answer. Any economic system should be able to answer these questions.
1) The market decides what will be produced.
2) The market decides how things will be produced?
3) The market decides for whom the products will be produced.
Demand-
The number of units of a good or service that a buyer
is willing (I am not willing to buy sweet potatoes)
and able (I am not able to buy a Porsche)
to buy at various prices. (a range of prices)
Quantity Demanded: the total amount of a commodity that all households wish to purchase. (These commodities must meet the definition of demand.)
Suppose you owned a C.D. player and c.d.'s cost $50 a piece. How many a year would you buy? Now suppose they cost $35 a piece. How many a year would you buy then? What if the cost was $20 dollars a year? Finally how many would you buy if they cost $5 a piece. Let’s look at this on a chart.
This is what we call a demand schedule. It is a table that shows how much consumers are willing and able to purchase at various prices.
You can have a demand schedule for an individual or a market. The market demand curve is just the summation of all the individual demand curves.
In looking at the table you will notice that as the price decreases quantity demanded (notice not your demand) increases. As price increases your quantity demanded for C.D.'S. This is called the law of demand.
The law of demand: as price increases your quantity demanded for a good or service will decrease and vice versa
This is what is called a DEMAND CURVE: A graph of a demand schedule: a demand curve is drawn on the assumption that everything except the commodity's own price is held constant (ceteris paribus); a change in any of the variables previously held constant will shift the demand curve to a new positions.
There are two main reasons for a downwardly sloping demand curve.
1) The income and substitution effect and
2) The Law of Diminishing Marginal Utility.
Income effect: The lower the price the more one can afford of a good without giving up other goods. If you make $20 per week you could buy 10 steaks at $2 per steak. If the price decreased to $1 per steak your income has in effect increased because your purchasing power has increased. You can now buy 20 steaks. At the same time, if the price of steaks went down you have more money to buy steaks and more money to buy other goods.
Substitution effect: at a lower price, you have the incentive to substitute the cheaper goods for similar goods, which are now relatively more expensive. If steaks now drop in price to $1 per pound you have an incentive to substitute steak for hamburger.
Utility: Satisfaction derived from consuming a commodity. Measured with “Utils”
TOTAL UTILITY: The total satisfaction from consuming some commodity
MARGINAL UTILITY: The change in satisfaction resulting from consuming a little more or a little less of a commodity
LAW OF DIMINISHING MARGINAL UTILITY: The utility any household derives from successive units of a particular commodity diminishes as total consumption of the commodity increases while the consumption of all other commodities remains constant
UTILITY THEORY OF DEMAND: Each household demands each good up to the point at which the marginal utility per dollar spent on it is the same as the marginal utility of the dollar spent on another good. When this condition is met, the household cannot shift a dollar of expenditures from one commodity to another and still increase its utility.
MUx = MUy
px py
This says that the household will allocate its expenditure so that the utility gained from the last dollar spent on a commodity is equal.
Change in Quantity Demanded
A decrease in price leads to an increase in Quantity Demanded
An increase in price leads to a decrease in Quantity Demanded
DETERMINANTS OF DEMAND:
When a determinant changes the demand curve shifts. The direction of the shift comes from the determinant that causes the change.
1) CONSUMERS’ INCOMES: a rise in average household income shifts the demand curve for most commodities to the right. This indicates that more will be demanded at each possible price. The direction of the shift depends on whether the good is inferior or normal (also called superior).
SUPERIOR GOODS (also called normal): those goods whose demand varies directly with income. (Examples: Steak, Luxury cars...)
Increase in income will lead to increase in demand for the normal good
Decrease in income will lead to decrease in demand for the normal good
INFERIOR GOODS: those goods whose demand varies inversely with income. (Ex: Hamburgers, used cars...)
2) CONSUMERS’ TASTES AND PREFERENCES: A change in tastes and preferences in favor of a commodity shifts the demand curve to the right more will be bought at each price. (C.d.'s change demand for records)
If people prefer more of a product you will get an increase in demand. If they prefer less of a product you will get a decrease in demand.
3) THE PRICE OF COMPLEMENTARY GOODS:
A fall in the price of a complementary commodity will shift a commodity’s demand curve to the right.
Example: A decrease in the price of baked potatoes means the demand curve for sour cream will increase. Notice this means more sour cream will be bought at each price.
Decrease in price of baked potatoes
Increase in demand for sour cream
An increase in the price of baked potatoes will cause demand curve for sour cream to decrease.
(Can you graph this?)
4) THE PRICE OF SUBSTITUTES:
A rise in the price of a substitute for a commodity shifts the demand curve for the commodity to the right.
Example: An increase in the price of margarine leads to an increase in the demand for butter.
Increase in price of margarine
Increase in demand for butter
A decrease in the price of beef leads to a decrease in demand for pork.
5) CHANGE IN POPULATION:
A rise in population will shift the demand curves for commodities to the right, indicating that more will be bought at each price. (THIS ALSO INCLUDES NEW MARKETS.) (Baby boom, Germany)
A decrease in population will shift the demand curve for the commodity to the left.
6) CONSUMER EXPECTATIONS ABOUT PRICE:
If consumers expect prices to rise in the near future the demand for goods will increase. (Increase in Demand)
If consumers expect prices to fall in the near future the demand for goods will decrease. (Decrease in Demand)
7) CONSUMER EXPECTATIONS ABOUT INCOME: If consumers expect overall incomes to fall the demand will decrease now.
(Ex: an announced increase in future sin taxes will increase demand for those goods before the tax goes in effect.)
When students are in their last year of college they often get job offers a few months before they graduate. They then run out and buy new clothes, a new car… because they expect higher wages.
SPEND TIME MAKING SURE YOU UNDERSTAND THE DIFFERENCE BETWEEN A CHANGE IN DEMAND AND A CHANGE IN QUANTITY DEMANDED.
Micro Unit 2 Lesson 2 & 3
SUPPLY: The number of units of a good or service that a seller is willing and able to sell at various prices.
SUPPLY SCHEDULE: A table that shows how much sellers are willing and able to supply at various prices.
LAW OF SUPPLY: As price of goods and services increase, sellers usually will want to supply more of those goods or services, and vice versa
A decrease in price leads to a decrease in Quantity Supplied.
A increase in price leads to a increase in Quantity Supplied.
DETERMINANTS OF SUPPLY
1) RESOURCE PRICES:
A rise in the price of inputs shifts the supply curve to the left indicating that less will be supplied at any given price.
A fall in the price of inputs shifts the supply curve to the right.
2) TECHNOLOGICAL CHANGE:
A decrease in production costs will increase the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the right.
An increase in production costs will decrease the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the left.
3) TAXES
An increase in the taxes will shift the supply curve to the left.
4) SUBSIDIES:
A subsidy is a payment to a company to produce (or not produce) something. This makes it cheaper for the company to produce so the supply curve shifts to the right.
5) EXPECTATIONS:
If the supplier expects future profits of their good to rise they will decrease the supply of the good now. This will shift the curve to the left.
If the supplier expects future profits of their good to fall they will increase the supply of the good now. This will shift the curve to the right.
6) NUMBER OF SELLERS:
An increase in the number of sellers will shift the supply curve for the product to the right.
The price at which the quantity demanded equals the quantity supplied is called the equilibrium price.
Notice that equilibrium is defined as a state of balance between opposing forces
Shortage:
In this case the producer has set the price too low. This means quantity demanded is much higher than quantity supplied.
This market is not in equilibrium. As sellers realize they can not keep the product on the shelves, they will raise the price. The market will work its way to equilibrium.
Surplus
In this case the producer has set the price too high. This means quantity demanded is much lower than quantity supplied.
This market is not in equilibrium. As sellers realize they are not selling as much of their product as they want at this price, they will lower the price. The market will work its way to equilibrium.
What happens to equilibrium when one of the determinants of demand change?
In this case a determinant of demand causes an increase in demand. This caused the price to increase and the quantity to increase.
What happens to equilibrium when the one of the determinants of supply change?
In this case a determinant of supply causes an increase in supply. This caused the price to decrease and the quantity to increase.
PRICE CEILING: The maximum legal price a seller may charge for a product or service.
This allows people to purchase G&S at a lower price than they would have otherwise been able to get it for. This allows many a chance to afford these things.
A price ceiling is below equilibrium point.
Notice that a ceiling keeps the price low and does not allow the market to drive the price up. This keeps buyers in the market that would have otherwise gotten out. At that price the quantity supplied and the quantity demanded cannot reach equilibrium. Hence a shortage.
PRICE FLOORS: Minimum prices fixed by government which are above equilibrium prices.
Ex: minimum wage, price floors of agriculture products.
Notice that the floor keeps the price above the equilibrium. Suppliers are willing to increase Qs at this artificial price while some demanders are driven out of the market. The net result is a surplus.
Consumer Surplus: the difference between the market price and the maximum price the consumer would pay to obtain that unit
Producer Surplus: the difference between the market price and the minimum price the producer would be willing to take for the product.
What happens when both supply and demand change?
In economics we do not deal with absolute terms. That means we do not really know how far the curves shift. This means that any time you shift both curves, either Quantity or Price will not be able to be determined. (Indeterminant)
With and increase in S and an increase in D Quantity increases and price is indeterminant.
With and decrease in S and an decrease in D Quantity decreases and price is indeterminant.
Decrease D and Increase supply means that Price decrease and Q is indeterminant.
Increase D and Decrease supply means that Price increase and Q is indeterminant.
Unit 2: Lesson 5 (Activities 20-23)
Discuss the subject of the slope of a line. How is it found? (rise over run) or the vertical axis divided by the horizontal axis. Notice that this is elasticity.
The responsiveness, or sensitivity, of consumers to a change in the price of a product is measured by the concept of Price elasticity of demand. Simply put, if consumers respond (relatively) to a change in price it is said to be elastic. If they do not respond (relatively) to a change in price the product is said to be inelastic.
There are four things that go into determining the elasticity of a demand curve.
1) Luxuries versus necessities. This is what we have been discussing. Your quantity demanded for heart surgery will not change much with the change in price.
Ex of elastic demands: Sports cars, riding lawn mowers, V.C.R's.
Ex of inelastic demands: food, electricity, health care.
2) Availability of substitutes. The greater the number of substitute the more elastic the product. If the price of beef went way up you would just switch to chicken. Therefore we can say that the demand curve for beef is very elastic. Its quantity demanded changes with a change in price.
elastic: c.d.'s, sugar,
inelastic: U.S. mail, local telephone company, gasoline
3) Proportion of income. The greater the price of a good relative to one's budget, the greater the elasticity of demand. If the price for candy bars increased 10% (or 4 cents) your quantity demanded would not change much. However if the price of a 100,000-dollar house increase 10% (or $10,000) your quantity demanded would most likely change a lot. A house would have an inelastic demand curve.
elastic: automobiles, houses, boats
inelastic: soft drinks, computer disks
4) Time: The longer the time period the more elastic a demand curve becomes. A person will not run out and buy a smaller car if the price of gas goes up. Instead they will wait until their older car wears out.
Have students do Activity 21. Answer any questions they have about elasticity.
Examples of Elastic curves: steak, ice cream, riding lawn mowers...
Examples of Inelastic curves: water, electricity, medicine...
Ask what happens when price decreases? Qd increases. The measurement of the responsiveness to this price change is elasticity.
What would you expect elasticity to be if the price decreased by 1% and Qd increased by 4%. (ELASTIC)
A one percent change in price leads to a smaller change in Qd is inelastic.
Percent Change: Old-New
Old
Ed= % change in quantity demanded of product X
% change in price of product X
This is the same as saying
Ed= change in quantity demanded of X / change in price of X
original quantity demanded of X original price of X
Midpoint Formula:
Ed = change in quantity demanded divided by change in price
sum of quantities/2 sum of prices/2
Because of the law of demand this number will always be negative. Ignore negatives.
This number tells us that a 1% change in price leads to a x percent change in Qd.
Less than one is inelastic. More than one is elastic. One is unitary.
(Notice that this will always yield a negative number. Ignore this.)
Demand is elastic if a given percentage change in price results in a larger percentage change in quantity demanded. ( a 4% increase in price results in a 8% decline in QD.)
Demand is inelastic if a given percentage change in price is accompanied by a relatively smaller change in quantity demanded. ( a 4% increase in price results in a 2% decline in Q.D.)
Market: an institution or mechanism, which brings together buyers ("demanders") and sellers ("suppliers") of particular goods and services.
Notice that the remainder of this unit assumes a perfectly competitive market. This means that there are a large number of independently acting buyers and sellers.
Three questions the market can answer. Any economic system should be able to answer these questions.
1) The market decides what will be produced.
2) The market decides how things will be produced?
3) The market decides for whom the products will be produced.
Demand-
The number of units of a good or service that a buyer
is willing (I am not willing to buy sweet potatoes)
and able (I am not able to buy a Porsche)
to buy at various prices. (a range of prices)
Quantity Demanded: the total amount of a commodity that all households wish to purchase. (These commodities must meet the definition of demand.)
Suppose you owned a C.D. player and c.d.'s cost $50 a piece. How many a year would you buy? Now suppose they cost $35 a piece. How many a year would you buy then? What if the cost was $20 dollars a year? Finally how many would you buy if they cost $5 a piece. Let’s look at this on a chart.
This is what we call a demand schedule. It is a table that shows how much consumers are willing and able to purchase at various prices.
You can have a demand schedule for an individual or a market. The market demand curve is just the summation of all the individual demand curves.
In looking at the table you will notice that as the price decreases quantity demanded (notice not your demand) increases. As price increases your quantity demanded for C.D.'S. This is called the law of demand.
The law of demand: as price increases your quantity demanded for a good or service will decrease and vice versa
This is what is called a DEMAND CURVE: A graph of a demand schedule: a demand curve is drawn on the assumption that everything except the commodity's own price is held constant (ceteris paribus); a change in any of the variables previously held constant will shift the demand curve to a new positions.
There are two main reasons for a downwardly sloping demand curve.
1) The income and substitution effect and
2) The Law of Diminishing Marginal Utility.
Income effect: The lower the price the more one can afford of a good without giving up other goods. If you make $20 per week you could buy 10 steaks at $2 per steak. If the price decreased to $1 per steak your income has in effect increased because your purchasing power has increased. You can now buy 20 steaks. At the same time, if the price of steaks went down you have more money to buy steaks and more money to buy other goods.
Substitution effect: at a lower price, you have the incentive to substitute the cheaper goods for similar goods, which are now relatively more expensive. If steaks now drop in price to $1 per pound you have an incentive to substitute steak for hamburger.
Utility: Satisfaction derived from consuming a commodity. Measured with “Utils”
TOTAL UTILITY: The total satisfaction from consuming some commodity
MARGINAL UTILITY: The change in satisfaction resulting from consuming a little more or a little less of a commodity
LAW OF DIMINISHING MARGINAL UTILITY: The utility any household derives from successive units of a particular commodity diminishes as total consumption of the commodity increases while the consumption of all other commodities remains constant
UTILITY THEORY OF DEMAND: Each household demands each good up to the point at which the marginal utility per dollar spent on it is the same as the marginal utility of the dollar spent on another good. When this condition is met, the household cannot shift a dollar of expenditures from one commodity to another and still increase its utility.
MUx = MUy
px py
This says that the household will allocate its expenditure so that the utility gained from the last dollar spent on a commodity is equal.
Change in Quantity Demanded
A decrease in price leads to an increase in Quantity Demanded
An increase in price leads to a decrease in Quantity Demanded
DETERMINANTS OF DEMAND:
When a determinant changes the demand curve shifts. The direction of the shift comes from the determinant that causes the change.
1) CONSUMERS’ INCOMES: a rise in average household income shifts the demand curve for most commodities to the right. This indicates that more will be demanded at each possible price. The direction of the shift depends on whether the good is inferior or normal (also called superior).
SUPERIOR GOODS (also called normal): those goods whose demand varies directly with income. (Examples: Steak, Luxury cars...)
Increase in income will lead to increase in demand for the normal good
Decrease in income will lead to decrease in demand for the normal good
INFERIOR GOODS: those goods whose demand varies inversely with income. (Ex: Hamburgers, used cars...)
2) CONSUMERS’ TASTES AND PREFERENCES: A change in tastes and preferences in favor of a commodity shifts the demand curve to the right more will be bought at each price. (C.d.'s change demand for records)
If people prefer more of a product you will get an increase in demand. If they prefer less of a product you will get a decrease in demand.
3) THE PRICE OF COMPLEMENTARY GOODS:
A fall in the price of a complementary commodity will shift a commodity’s demand curve to the right.
Example: A decrease in the price of baked potatoes means the demand curve for sour cream will increase. Notice this means more sour cream will be bought at each price.
Decrease in price of baked potatoes
Increase in demand for sour cream
An increase in the price of baked potatoes will cause demand curve for sour cream to decrease.
(Can you graph this?)
4) THE PRICE OF SUBSTITUTES:
A rise in the price of a substitute for a commodity shifts the demand curve for the commodity to the right.
Example: An increase in the price of margarine leads to an increase in the demand for butter.
Increase in price of margarine
Increase in demand for butter
A decrease in the price of beef leads to a decrease in demand for pork.
5) CHANGE IN POPULATION:
A rise in population will shift the demand curves for commodities to the right, indicating that more will be bought at each price. (THIS ALSO INCLUDES NEW MARKETS.) (Baby boom, Germany)
A decrease in population will shift the demand curve for the commodity to the left.
6) CONSUMER EXPECTATIONS ABOUT PRICE:
If consumers expect prices to rise in the near future the demand for goods will increase. (Increase in Demand)
If consumers expect prices to fall in the near future the demand for goods will decrease. (Decrease in Demand)
7) CONSUMER EXPECTATIONS ABOUT INCOME: If consumers expect overall incomes to fall the demand will decrease now.
(Ex: an announced increase in future sin taxes will increase demand for those goods before the tax goes in effect.)
When students are in their last year of college they often get job offers a few months before they graduate. They then run out and buy new clothes, a new car… because they expect higher wages.
SPEND TIME MAKING SURE YOU UNDERSTAND THE DIFFERENCE BETWEEN A CHANGE IN DEMAND AND A CHANGE IN QUANTITY DEMANDED.
Micro Unit 2 Lesson 2 & 3
SUPPLY: The number of units of a good or service that a seller is willing and able to sell at various prices.
SUPPLY SCHEDULE: A table that shows how much sellers are willing and able to supply at various prices.
LAW OF SUPPLY: As price of goods and services increase, sellers usually will want to supply more of those goods or services, and vice versa
A decrease in price leads to a decrease in Quantity Supplied.
A increase in price leads to a increase in Quantity Supplied.
DETERMINANTS OF SUPPLY
1) RESOURCE PRICES:
A rise in the price of inputs shifts the supply curve to the left indicating that less will be supplied at any given price.
A fall in the price of inputs shifts the supply curve to the right.
2) TECHNOLOGICAL CHANGE:
A decrease in production costs will increase the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the right.
An increase in production costs will decrease the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the left.
3) TAXES
An increase in the taxes will shift the supply curve to the left.
4) SUBSIDIES:
A subsidy is a payment to a company to produce (or not produce) something. This makes it cheaper for the company to produce so the supply curve shifts to the right.
5) EXPECTATIONS:
If the supplier expects future profits of their good to rise they will decrease the supply of the good now. This will shift the curve to the left.
If the supplier expects future profits of their good to fall they will increase the supply of the good now. This will shift the curve to the right.
6) NUMBER OF SELLERS:
An increase in the number of sellers will shift the supply curve for the product to the right.
The price at which the quantity demanded equals the quantity supplied is called the equilibrium price.
Notice that equilibrium is defined as a state of balance between opposing forces
Shortage:
In this case the producer has set the price too low. This means quantity demanded is much higher than quantity supplied.
This market is not in equilibrium. As sellers realize they can not keep the product on the shelves, they will raise the price. The market will work its way to equilibrium.
Surplus
In this case the producer has set the price too high. This means quantity demanded is much lower than quantity supplied.
This market is not in equilibrium. As sellers realize they are not selling as much of their product as they want at this price, they will lower the price. The market will work its way to equilibrium.
What happens to equilibrium when one of the determinants of demand change?
In this case a determinant of demand causes an increase in demand. This caused the price to increase and the quantity to increase.
What happens to equilibrium when the one of the determinants of supply change?
In this case a determinant of supply causes an increase in supply. This caused the price to decrease and the quantity to increase.
PRICE CEILING: The maximum legal price a seller may charge for a product or service.
This allows people to purchase G&S at a lower price than they would have otherwise been able to get it for. This allows many a chance to afford these things.
A price ceiling is below equilibrium point.
Notice that a ceiling keeps the price low and does not allow the market to drive the price up. This keeps buyers in the market that would have otherwise gotten out. At that price the quantity supplied and the quantity demanded cannot reach equilibrium. Hence a shortage.
PRICE FLOORS: Minimum prices fixed by government which are above equilibrium prices.
Ex: minimum wage, price floors of agriculture products.
Notice that the floor keeps the price above the equilibrium. Suppliers are willing to increase Qs at this artificial price while some demanders are driven out of the market. The net result is a surplus.
Consumer Surplus: the difference between the market price and the maximum price the consumer would pay to obtain that unit
Producer Surplus: the difference between the market price and the minimum price the producer would be willing to take for the product.
What happens when both supply and demand change?
In economics we do not deal with absolute terms. That means we do not really know how far the curves shift. This means that any time you shift both curves, either Quantity or Price will not be able to be determined. (Indeterminant)
With and increase in S and an increase in D Quantity increases and price is indeterminant.
With and decrease in S and an decrease in D Quantity decreases and price is indeterminant.
Decrease D and Increase supply means that Price decrease and Q is indeterminant.
Increase D and Decrease supply means that Price increase and Q is indeterminant.
Unit 2: Lesson 5 (Activities 20-23)
Discuss the subject of the slope of a line. How is it found? (rise over run) or the vertical axis divided by the horizontal axis. Notice that this is elasticity.
The responsiveness, or sensitivity, of consumers to a change in the price of a product is measured by the concept of Price elasticity of demand. Simply put, if consumers respond (relatively) to a change in price it is said to be elastic. If they do not respond (relatively) to a change in price the product is said to be inelastic.
There are four things that go into determining the elasticity of a demand curve.
1) Luxuries versus necessities. This is what we have been discussing. Your quantity demanded for heart surgery will not change much with the change in price.
Ex of elastic demands: Sports cars, riding lawn mowers, V.C.R's.
Ex of inelastic demands: food, electricity, health care.
2) Availability of substitutes. The greater the number of substitute the more elastic the product. If the price of beef went way up you would just switch to chicken. Therefore we can say that the demand curve for beef is very elastic. Its quantity demanded changes with a change in price.
elastic: c.d.'s, sugar,
inelastic: U.S. mail, local telephone company, gasoline
3) Proportion of income. The greater the price of a good relative to one's budget, the greater the elasticity of demand. If the price for candy bars increased 10% (or 4 cents) your quantity demanded would not change much. However if the price of a 100,000-dollar house increase 10% (or $10,000) your quantity demanded would most likely change a lot. A house would have an inelastic demand curve.
elastic: automobiles, houses, boats
inelastic: soft drinks, computer disks
4) Time: The longer the time period the more elastic a demand curve becomes. A person will not run out and buy a smaller car if the price of gas goes up. Instead they will wait until their older car wears out.
Have students do Activity 21. Answer any questions they have about elasticity.
Examples of Elastic curves: steak, ice cream, riding lawn mowers...
Examples of Inelastic curves: water, electricity, medicine...
Ask what happens when price decreases? Qd increases. The measurement of the responsiveness to this price change is elasticity.
What would you expect elasticity to be if the price decreased by 1% and Qd increased by 4%. (ELASTIC)
A one percent change in price leads to a smaller change in Qd is inelastic.
Percent Change: Old-New
Old
Ed= % change in quantity demanded of product X
% change in price of product X
This is the same as saying
Ed= change in quantity demanded of X / change in price of X
original quantity demanded of X original price of X
Midpoint Formula:
Ed = change in quantity demanded divided by change in price
sum of quantities/2 sum of prices/2
Because of the law of demand this number will always be negative. Ignore negatives.
This number tells us that a 1% change in price leads to a x percent change in Qd.
Less than one is inelastic. More than one is elastic. One is unitary.
(Notice that this will always yield a negative number. Ignore this.)
Demand is elastic if a given percentage change in price results in a larger percentage change in quantity demanded. ( a 4% increase in price results in a 8% decline in QD.)
Demand is inelastic if a given percentage change in price is accompanied by a relatively smaller change in quantity demanded. ( a 4% increase in price results in a 2% decline in Q.D.)
Tuesday, August 18, 2009
Honors World History Unit 1 Part B
The Egyptians
•Kemet (Black Land) of the Nile River Valley
•5000 BC, nomads began settling along the Nile
•Farming villages that grew wheat and barley
•Series of tribal kingdoms develop
•Early Egypt divided into north and south
•Lower Egypt in the north where Nile empties into Mediterranean
•Upper Egypt in the south bordering Ethiopia
•Narmer (Menes), king of Upper Egypt conquered Lower Egypt around 3000 BC w/capital at Memphis
•Old Kingdom collapsed due to infighting of nobles
•First Dark Ages from 2200 BC to 2050 BC
•New Dynasty seized power in 2050 BC to establish the Middle Kingdom with capital at Thebes
•Expansion of territory into Nubia (Sudan) and Syria
•Around 1700 BC, invaders from southwest Asia attacked Egypt, beginning the Second Dark Ages
•Hyksos conquered Egypt with bronze weapons and horse drawn chariots (Egyptians fought on foot with copper and stone weapons)
•Around 1600 BC, Ahmose led the revolt against Hyksos rule and drove them out
•Ahmose was the first ruler of the New Kingdom, first to use the title pharaoh (great house of the king)
•Ahmose rebuilt Egypt to even greater glory
•Around 1480 BC, Hatshepsut came to power when her husband Thutmose II (her half brother) died.
•Her stepson (born to Thutmose II and a harem girl) was too young to rule
•She became Regent of Egypt
•About 7 years into her regency, she proclaimed herself pharaoh and wore men’s clothing and the false beard
•Why? Now believe there were several coup attempts against her and her stepson
•Had to take on the persona of a male pharaoh to gain legitimacy and acceptance
•Thutmose III became pharaoh upon her death
•Unlike his stepmother, focused on military and conquest
•Conquered northern Mesopotamia and parts of central Africa
•Huge wealth came into Egypt from conquered areas
•After Thutmose III died, series of weak pharaohs brought about decline
•Saved from destruction by Ramses II who fought off Hittite invasion at the Battle of Kadesh
•Treaty signed between two nations calling for truce and alliance
•After Ramses II died in 1237 BC, Egypt began to decline and later destroyed by Seafaring raiders from the Mediterranean
•Finally conquered by Libyans from the west and Kushites from the south
•Kemet (Black Land) of the Nile River Valley
•5000 BC, nomads began settling along the Nile
•Farming villages that grew wheat and barley
•Series of tribal kingdoms develop
•Early Egypt divided into north and south
•Lower Egypt in the north where Nile empties into Mediterranean
•Upper Egypt in the south bordering Ethiopia
•Narmer (Menes), king of Upper Egypt conquered Lower Egypt around 3000 BC w/capital at Memphis
•Old Kingdom collapsed due to infighting of nobles
•First Dark Ages from 2200 BC to 2050 BC
•New Dynasty seized power in 2050 BC to establish the Middle Kingdom with capital at Thebes
•Expansion of territory into Nubia (Sudan) and Syria
•Around 1700 BC, invaders from southwest Asia attacked Egypt, beginning the Second Dark Ages
•Hyksos conquered Egypt with bronze weapons and horse drawn chariots (Egyptians fought on foot with copper and stone weapons)
•Around 1600 BC, Ahmose led the revolt against Hyksos rule and drove them out
•Ahmose was the first ruler of the New Kingdom, first to use the title pharaoh (great house of the king)
•Ahmose rebuilt Egypt to even greater glory
•Around 1480 BC, Hatshepsut came to power when her husband Thutmose II (her half brother) died.
•Her stepson (born to Thutmose II and a harem girl) was too young to rule
•She became Regent of Egypt
•About 7 years into her regency, she proclaimed herself pharaoh and wore men’s clothing and the false beard
•Why? Now believe there were several coup attempts against her and her stepson
•Had to take on the persona of a male pharaoh to gain legitimacy and acceptance
•Thutmose III became pharaoh upon her death
•Unlike his stepmother, focused on military and conquest
•Conquered northern Mesopotamia and parts of central Africa
•Huge wealth came into Egypt from conquered areas
•After Thutmose III died, series of weak pharaohs brought about decline
•Saved from destruction by Ramses II who fought off Hittite invasion at the Battle of Kadesh
•Treaty signed between two nations calling for truce and alliance
•After Ramses II died in 1237 BC, Egypt began to decline and later destroyed by Seafaring raiders from the Mediterranean
•Finally conquered by Libyans from the west and Kushites from the south
Tuesday, August 11, 2009
AP Macro Notes Unit 1 part C
Micro Unit 2 Lesson 1
(2 days)
Demand
Market: an institution or mechanism, which brings together buyers ("demanders") and sellers ("suppliers") of particular goods and services.
Notice that the remainder of this unit assumes a perfectly competitive market. This means that there are a large number of independently acting buyers and sellers.
Three questions the market can answer. Any economic system should be able to answer these questions.
1) The market decides what will be produced.
2) The market decides how things will be produced?
3) The market decides for whom the products will be produced.
Demand-
The number of units of a good or service that a buyer
is willing (I am not willing to buy sweet potatoes)
and able (I am not able to buy a Porsche)
to buy at various prices. (a range of prices)
Quantity Demanded: the total amount of a commodity that all households wish to purchase. (These commodities must meet the definition of demand.)
Suppose you owned a C.D. player and c.d.'s cost $50 a piece. How many a year would you buy? Now suppose they cost $35 a piece. How many a year would you buy then? What if the cost was $20 dollars a year? Finally how many would you buy if they cost $5 a piece. Let’s look at this on a chart.
Price ($) Quantity Demanded
50 2
35 5
20 13
5 25
This is what we call a demand schedule. It is a table that shows how much consumers are willing and able to purchase at various prices.
You can have a demand schedule for an individual or a market. The market demand curve is just the summation of all the individual demand curves.
In looking at the table you will notice that as the price decreases quantity demanded (notice not your demand) increases. As price increases your quantity demanded for C.D.'S. This is called the law of demand.
The law of demand: as price increases your quantity demanded for a good or service will decrease and vice versa
This is what is called a DEMAND CURVE: A graph of a demand schedule: a demand curve is drawn on the assumption that everything except the commodity's own price is held constant (ceteris paribus); a change in any of the variables previously held constant will shift the demand curve to a new positions.
There are two main reasons for a downwardly sloping demand curve.
1) The income and substitution effect and
2) The Law of Diminishing Marginal Utility.
Income effect: The lower the price the more one can afford of a good without giving up other goods. If you make $20 per week you could buy 10 steaks at $2 per steak. If the price decreased to $1 per steak your income has in effect increased because your purchasing power has increased. You can now buy 20 steaks. At the same time, if the price of steaks went down you have more money to buy steaks and more money to buy other goods.
Substitution effect: at a lower price, you have the incentive to substitute the cheaper goods for similar goods, which are now relatively more expensive. If steaks now drop in price to $1 per pound you have an incentive to substitute steak for hamburger.
Utility: Satisfaction derived from consuming a commodity. Measured with “Utils”
TOTAL UTILITY: The total satisfaction from consuming some commodity
MARGINAL UTILITY: The change in satisfaction resulting from consuming a little more or a little less of a commodity
LAW OF DIMINISHING MARGINAL UTILITY: The utility any household derives from successive units of a particular commodity diminishes as total consumption of the commodity increases while the consumption of all other commodities remains constant
UTILITY THEORY OF DEMAND: Each household demands each good up to the point at which the marginal utility per dollar spent on it is the same as the marginal utility of the dollar spent on another good. When this condition is met, the household cannot shift a dollar of expenditures from one commodity to another and still increase its utility.
MUx = MUy
px py
This says that the household will allocate its expenditure so that the utility gained from the last dollar spent on a commodity is equal.
Change in Quantity Demanded
A decrease in price leads to an increase in Quantity Demanded
An increase in price leads to a decrease in Quantity Demanded
DETERMINANTS OF DEMAND:
When a determinant changes the demand curve shifts. The direction of the shift comes from the determinant that causes the change.
1) CONSUMERS’ INCOMES: a rise in average household income shifts the demand curve for most commodities to the right. This indicates that more will be demanded at each possible price. The direction of the shift depends on whether the good is inferior or normal (also called superior).
SUPERIOR GOODS (also called normal): those goods whose demand varies directly with income. (Examples: Steak, Luxury cars...)
Increase in income will lead to increase in demand for the normal good
Decrease in income will lead to decrease in demand for the normal good
INFERIOR GOODS: those goods whose demand varies inversely with income. (Ex: Hamburgers, used cars...)
2) CONSUMERS’ TASTES AND PREFERENCES: A change in tastes and preferences in favor of a commodity shifts the demand curve to the right more will be bought at each price. (C.d.'s change demand for records)
If people prefer more of a product you will get an increase in demand. If they prefer less of a product you will get a decrease in demand.
3) THE PRICE OF COMPLEMENTARY GOODS:
A fall in the price of a complementary commodity will shift a commodity’s demand curve to the right.
Example: A decrease in the price of baked potatoes means the demand curve for sour cream will increase. Notice this means more sour cream will be bought at each price.
Decrease in price of baked potatoes
Increase in demand for sour cream
An increase in the price of baked potatoes will cause demand curve for sour cream to decrease.
(Can you graph this?)
4) THE PRICE OF SUBSTITUTES:
A rise in the price of a substitute for a commodity shifts the demand curve for the commodity to the right.
Example: An increase in the price of margarine leads to an increase in the demand for butter.
Increase in price of margarine
Increase in demand for butter
A decrease in the price of beef leads to a decrease in demand for pork.
5) CHANGE IN POPULATION:
A rise in population will shift the demand curves for commodities to the right, indicating that more will be bought at each price. (THIS ALSO INCLUDES NEW MARKETS.) (Baby boom, Germany)
A decrease in population will shift the demand curve for the commodity to the left.
6) CONSUMER EXPECTATIONS ABOUT PRICE:
If consumers expect prices to rise in the near future the demand for goods will increase. (Increase in Demand)
If consumers expect prices to fall in the near future the demand for goods will decrease. (Decrease in Demand)
7) CONSUMER EXPECTATIONS ABOUT INCOME: If consumers expect overall incomes to fall the demand will decrease now.
(Ex: an announced increase in future sin taxes will increase demand for those goods before the tax goes in effect.)
When students are in their last year of college they often get job offers a few months before they graduate. They then run out and buy new clothes, a new car… because they expect higher wages.
SPEND TIME MAKING SURE YOU UNDERSTAND THE DIFFERENCE BETWEEN A CHANGE IN DEMAND AND A CHANGE IN QUANTITY DEMANDED.
Micro Unit 2 Lesson 2 & 3
SUPPLY: The number of units of a good or service that a seller is willing and able to sell at various prices.
SUPPLY SCHEDULE: A table that shows how much sellers are willing and able to supply at various prices.
LAW OF SUPPLY: As price of goods and services increase, sellers usually will want to supply more of those goods or services, and vice versa
Supply curve
A decrease in price leads to a decrease in Quantity Supplied.
A increase in price leads to a increase in Quantity Supplied.
Increase in Supply
Decrease in Supply
DETERMINANTS OF SUPPLY
1) RESOURCE PRICES:
A rise in the price of inputs shifts the supply curve to the left indicating that less will be supplied at any given price.
A fall in the price of inputs shifts the supply curve to the right.
2) TECHNOLOGICAL CHANGE:
A decrease in production costs will increase the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the right.
An increase in production costs will decrease the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the left.
3) TAXES
An increase in the taxes will shift the supply curve to the left.
4) SUBSIDIES:
A subsidy is a payment to a company to produce (or not produce) something. This makes it cheaper for the company to produce so the supply curve shifts to the right.
5) EXPECTATIONS:
If the supplier expects future profits of their good to rise they will decrease the supply of the good now. This will shift the curve to the left.
If the supplier expects future profits of their good to fall they will increase the supply of the good now. This will shift the curve to the right.
6) NUMBER OF SELLERS:
An increase in the number of sellers will shift the supply curve for the product to the right.
The price at which the quantity demanded equals the quantity supplied is called the equilibrium price.
Notice that equilibrium is defined as a state of balance between opposing forces
Shortage:
In this case the producer has set the price too low. This means quantity demanded is much higher than quantity supplied.
This market is not in equilibrium. As sellers realize they can not keep the product on the shelves, they will raise the price. The market will work its way to equilibrium.
Surplus
In this case the producer has set the price too high. This means quantity demanded is much lower than quantity supplied.
This market is not in equilibrium. As sellers realize they are not selling as much of their product as they want at this price, they will lower the price. The market will work its way to equilibrium.
What happens to equilibrium when one of the determinants of demand change?
In this case a determinant of demand causes an increase in demand. This caused the price to increase and the quantity to increase.
Decrease in Demand
Can you draw a decrease in demand?
What happens to equilibrium when the one of the determinants of supply change?
In this case a determinant of supply causes an increase in supply. This caused the price to decrease and the quantity to increase.
Can you draw a decrease in supply?
PRICE CEILING: The maximum legal price a seller may charge for a product or service.
This allows people to purchase G&S at a lower price than they would have otherwise been able to get it for. This allows many a chance to afford these things.
A price ceiling is below equilibrium point.
Notice that a ceiling keeps the price low and does not allow the market to drive the price up. This keeps buyers in the market that would have otherwise gotten out. At that price the quantity supplied and the quantity demanded cannot reach equilibrium. Hence a shortage.
PRICE FLOORS: Minimum prices fixed by government which are above equilibrium prices.
Ex: minimum wage, price floors of agriculture products.
Notice that the floor keeps the price above the equilibrium. Suppliers are willing to increase Qs at this artificial price while some demanders are driven out of the market. The net result is a surplus.
Consumer Surplus: the difference between the market price and the maximum price the consumer would pay to obtain that unit
Producer Surplus: the difference between the market price and the minimum price the producer would be willing to take for the product.
What happens when both supply and demand change?
In economics we do not deal with absolute terms. That means we do not really know how far the curves shift. This means that any time you shift both curves, either Quantity or Price will not be able to be determined. (Indeterminant)
With and increase in S and an increase in D Quantity increases and price is indeterminant.
With and decrease in S and an decrease in D Quantity decreases and price is indeterminant.
Decrease D and Increase supply means that Price decrease and Q is indeterminant.
Increase D and Decrease supply means that Price increase and Q is indeterminant.
Dead weight loss from price ceilings
Consumer Surplus before the ceiling
Producer Surplus before ceiling
Combined consumer and producer surplus before ceiling
Combined consumer and producer surplus after the ceiling
Therefore bfc is the dead weight loss. It is lost consumer and producer surplus.
Unit 2: Lesson 5 (Activities 20-23)
Discuss the subject of the slope of a line. How is it found? (rise over run) or the vertical axis divided by the horizontal axis. Notice that this is elasticity.
The responsiveness, or sensitivity, of consumers to a change in the price of a product is measured by the concept of Price elasticity of demand. Simply put, if consumers respond (relatively) to a change in price it is said to be elastic. If they do not respond (relatively) to a change in price the product is said to be inelastic.
There are four things that go into determining the elasticity of a demand curve.
1) Luxuries versus necessities. This is what we have been discussing. Your quantity demanded for heart surgery will not change much with the change in price.
Ex of elastic demands: Sports cars, riding lawn mowers, V.C.R's.
Ex of inelastic demands: food, electricity, health care.
2) Availability of substitutes. The greater the number of substitute the more elastic the product. If the price of beef went way up you would just switch to chicken. Therefore we can say that the demand curve for beef is very elastic. Its quantity demanded changes with a change in price.
elastic: c.d.'s, sugar,
inelastic: U.S. mail, local telephone company, gasoline
3) Proportion of income. The greater the price of a good relative to one's budget, the greater the elasticity of demand. If the price for candy bars increased 10% (or 4 cents) your quantity demanded would not change much. However if the price of a 100,000-dollar house increase 10% (or $10,000) your quantity demanded would most likely change a lot. A house would have an inelastic demand curve.
elastic: automobiles, houses, boats
inelastic: soft drinks, computer disks
4) Time: The longer the time period the more elastic a demand curve becomes. A person will not run out and buy a smaller car if the price of gas goes up. Instead they will wait until their older car wears out.
Have students do Activity 21. Answer any questions they have about elasticity.
Examples of Elastic curves: steak, ice cream, riding lawn mowers...
Examples of Inelastic curves: water, electricity, medicine...
Ask what happens when price decreases? Qd increases. The measurement of the responsiveness to this price change is elasticity.
What would you expect elasticity to be if the price decreased by 1% and Qd increased by 4%. (ELASTIC)
A one percent change in price leads to a smaller change in Qd is inelastic.
Percent Change: Old-New
Old
Ed= % change in quantity demanded of product X
% change in price of product X
This is the same as saying
Ed= change in quantity demanded of X / change in price of X
original quantity demanded of X original price of X
Midpoint Formula:
Ed = change in quantity demanded divided by change in price
sum of quantities/2 sum of prices/2
Because of the law of demand this number will always be negative. Ignore negatives.
This number tells us that a 1% change in price leads to a x percent change in Qd.
Less than one is inelastic. More than one is elastic. One is unitary.
(Notice that this will always yield a negative number. Ignore this.)
Demand is elastic if a given percentage change in price results in a larger percentage change in quantity demanded. ( a 4% increase in price results in a 8% decline in QD.)
Demand is inelastic if a given percentage change in price is accompanied by a relatively smaller change in quantity demanded. ( a 4% increase in price results in a 2% decline in Q.D.)
When a given percentage change in price is accompanied by an identical change in quantity demanded this is said to be unitary elastic.
A good is perfectly inelastic when there will be no change in quantity demanded no matter what the % change in price. ex. medicine
A good is perfectly elastic when there is a major change in quantity demanded when there is a small % change in the price. ex:
The Total-Revenue Test
If demand is elastic a decrease in price will result in an increase in total revenue. This means that at the lower price more units are being bought. This offsets the lower price.
TR = P x Q
When you calculate TR you can look at it graphically.
If demand is elastic a change in price will result in a change in TR in the opposite direction.
If a 3% decrease in price leads to a 5% increase in Q. 5% divided by 3% is elastic. This means TR will be going up.
If demand is inelastic a change in price will result in a change in TR in the same direction. (Ex: If price increases total revenue will also increase. People cannot do without the product so they will buy it no matter how high the price.) If a 5% decrease in price leads to a 3% increase in Q. 3% divided by 5% is inelastic. This means TR will be going down.
If demand is unitary elastic a change in price will have no change in total revenue.
Price Elasticity of Supply:
If suppliers are responsive to price changes the supply is elastic.
If suppliers are not responsive to price change the supply is inelastic.
This is the exact formula used in Ed except you substitute supply for demand.
Es = change in quantity supplied divided by change in price
sum of quantities/2 sum of prices/2
1) Suppliers cannot respond immediately to price changes (as can demanders) once a computer is made the supplier will sell it even if the prices drop drastically. (They will take a large loss rather than a total loss.)
Notice because of the law of supply this number will always be positive so you do not have to worry about negatives.
In dealing with price elasticity you are dealing with movement along the curves. For Cross Elasticity and Income Elasticity you are dealing with movement along the curves.
CROSS ELASTICITY OF DEMAND: measures how sensitive consumer purchases of one product are to the change in price of some other product.
Exy= % change in quantity demanded of product X
% change in price of product Y
DO NOT IGNORE NEGATIVES HERE
If cross elasticity is positive: quantity demanded of X varies directly with the price of Y then X and Y are substitute goods.
Ex: If the price of steak increase then people will buy more hamburger.
If cross elasticity is negative: quantity demanded of X varies inversely with the price of Y then X and Y are complementary goods.
Ex: If the price of CD's goes way up then the quantity purchases of CD players will go down.
If the cross elasticity is near zero then the goods are independent goods and are unrelated.
Ex: If the price of sugar goes up it will have no effect on the price of paper.
INCOME ELASTICITY OF DEMAND: measures the percent change in quantity of product demanded which results from the percent change in consumer income.
Ey= % change in quantity demand
% change in income
DO NOT IGNORE NEGATIVES HERE
Remember that income is one of the determinants of demand. When income changes you get a change in demand rather than a chance in quantity demanded.
For normal or superior goods the higher the income the more of a product a person will purchase. (The higher the Ei the more likely that people will purchase the good as the income increases.) This will yield a positive number.
For inferior goods the Ei will be low. The higher the income the less likely they will purchase the good or service. (used cloths, ...) This will yield a negative number.
(2 days)
Demand
Market: an institution or mechanism, which brings together buyers ("demanders") and sellers ("suppliers") of particular goods and services.
Notice that the remainder of this unit assumes a perfectly competitive market. This means that there are a large number of independently acting buyers and sellers.
Three questions the market can answer. Any economic system should be able to answer these questions.
1) The market decides what will be produced.
2) The market decides how things will be produced?
3) The market decides for whom the products will be produced.
Demand-
The number of units of a good or service that a buyer
is willing (I am not willing to buy sweet potatoes)
and able (I am not able to buy a Porsche)
to buy at various prices. (a range of prices)
Quantity Demanded: the total amount of a commodity that all households wish to purchase. (These commodities must meet the definition of demand.)
Suppose you owned a C.D. player and c.d.'s cost $50 a piece. How many a year would you buy? Now suppose they cost $35 a piece. How many a year would you buy then? What if the cost was $20 dollars a year? Finally how many would you buy if they cost $5 a piece. Let’s look at this on a chart.
Price ($) Quantity Demanded
50 2
35 5
20 13
5 25
This is what we call a demand schedule. It is a table that shows how much consumers are willing and able to purchase at various prices.
You can have a demand schedule for an individual or a market. The market demand curve is just the summation of all the individual demand curves.
In looking at the table you will notice that as the price decreases quantity demanded (notice not your demand) increases. As price increases your quantity demanded for C.D.'S. This is called the law of demand.
The law of demand: as price increases your quantity demanded for a good or service will decrease and vice versa
This is what is called a DEMAND CURVE: A graph of a demand schedule: a demand curve is drawn on the assumption that everything except the commodity's own price is held constant (ceteris paribus); a change in any of the variables previously held constant will shift the demand curve to a new positions.
There are two main reasons for a downwardly sloping demand curve.
1) The income and substitution effect and
2) The Law of Diminishing Marginal Utility.
Income effect: The lower the price the more one can afford of a good without giving up other goods. If you make $20 per week you could buy 10 steaks at $2 per steak. If the price decreased to $1 per steak your income has in effect increased because your purchasing power has increased. You can now buy 20 steaks. At the same time, if the price of steaks went down you have more money to buy steaks and more money to buy other goods.
Substitution effect: at a lower price, you have the incentive to substitute the cheaper goods for similar goods, which are now relatively more expensive. If steaks now drop in price to $1 per pound you have an incentive to substitute steak for hamburger.
Utility: Satisfaction derived from consuming a commodity. Measured with “Utils”
TOTAL UTILITY: The total satisfaction from consuming some commodity
MARGINAL UTILITY: The change in satisfaction resulting from consuming a little more or a little less of a commodity
LAW OF DIMINISHING MARGINAL UTILITY: The utility any household derives from successive units of a particular commodity diminishes as total consumption of the commodity increases while the consumption of all other commodities remains constant
UTILITY THEORY OF DEMAND: Each household demands each good up to the point at which the marginal utility per dollar spent on it is the same as the marginal utility of the dollar spent on another good. When this condition is met, the household cannot shift a dollar of expenditures from one commodity to another and still increase its utility.
MUx = MUy
px py
This says that the household will allocate its expenditure so that the utility gained from the last dollar spent on a commodity is equal.
Change in Quantity Demanded
A decrease in price leads to an increase in Quantity Demanded
An increase in price leads to a decrease in Quantity Demanded
DETERMINANTS OF DEMAND:
When a determinant changes the demand curve shifts. The direction of the shift comes from the determinant that causes the change.
1) CONSUMERS’ INCOMES: a rise in average household income shifts the demand curve for most commodities to the right. This indicates that more will be demanded at each possible price. The direction of the shift depends on whether the good is inferior or normal (also called superior).
SUPERIOR GOODS (also called normal): those goods whose demand varies directly with income. (Examples: Steak, Luxury cars...)
Increase in income will lead to increase in demand for the normal good
Decrease in income will lead to decrease in demand for the normal good
INFERIOR GOODS: those goods whose demand varies inversely with income. (Ex: Hamburgers, used cars...)
2) CONSUMERS’ TASTES AND PREFERENCES: A change in tastes and preferences in favor of a commodity shifts the demand curve to the right more will be bought at each price. (C.d.'s change demand for records)
If people prefer more of a product you will get an increase in demand. If they prefer less of a product you will get a decrease in demand.
3) THE PRICE OF COMPLEMENTARY GOODS:
A fall in the price of a complementary commodity will shift a commodity’s demand curve to the right.
Example: A decrease in the price of baked potatoes means the demand curve for sour cream will increase. Notice this means more sour cream will be bought at each price.
Decrease in price of baked potatoes
Increase in demand for sour cream
An increase in the price of baked potatoes will cause demand curve for sour cream to decrease.
(Can you graph this?)
4) THE PRICE OF SUBSTITUTES:
A rise in the price of a substitute for a commodity shifts the demand curve for the commodity to the right.
Example: An increase in the price of margarine leads to an increase in the demand for butter.
Increase in price of margarine
Increase in demand for butter
A decrease in the price of beef leads to a decrease in demand for pork.
5) CHANGE IN POPULATION:
A rise in population will shift the demand curves for commodities to the right, indicating that more will be bought at each price. (THIS ALSO INCLUDES NEW MARKETS.) (Baby boom, Germany)
A decrease in population will shift the demand curve for the commodity to the left.
6) CONSUMER EXPECTATIONS ABOUT PRICE:
If consumers expect prices to rise in the near future the demand for goods will increase. (Increase in Demand)
If consumers expect prices to fall in the near future the demand for goods will decrease. (Decrease in Demand)
7) CONSUMER EXPECTATIONS ABOUT INCOME: If consumers expect overall incomes to fall the demand will decrease now.
(Ex: an announced increase in future sin taxes will increase demand for those goods before the tax goes in effect.)
When students are in their last year of college they often get job offers a few months before they graduate. They then run out and buy new clothes, a new car… because they expect higher wages.
SPEND TIME MAKING SURE YOU UNDERSTAND THE DIFFERENCE BETWEEN A CHANGE IN DEMAND AND A CHANGE IN QUANTITY DEMANDED.
Micro Unit 2 Lesson 2 & 3
SUPPLY: The number of units of a good or service that a seller is willing and able to sell at various prices.
SUPPLY SCHEDULE: A table that shows how much sellers are willing and able to supply at various prices.
LAW OF SUPPLY: As price of goods and services increase, sellers usually will want to supply more of those goods or services, and vice versa
Supply curve
A decrease in price leads to a decrease in Quantity Supplied.
A increase in price leads to a increase in Quantity Supplied.
Increase in Supply
Decrease in Supply
DETERMINANTS OF SUPPLY
1) RESOURCE PRICES:
A rise in the price of inputs shifts the supply curve to the left indicating that less will be supplied at any given price.
A fall in the price of inputs shifts the supply curve to the right.
2) TECHNOLOGICAL CHANGE:
A decrease in production costs will increase the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the right.
An increase in production costs will decrease the profits that can be earned at any given price of the commodity. This change shifts the supply curve to the left.
3) TAXES
An increase in the taxes will shift the supply curve to the left.
4) SUBSIDIES:
A subsidy is a payment to a company to produce (or not produce) something. This makes it cheaper for the company to produce so the supply curve shifts to the right.
5) EXPECTATIONS:
If the supplier expects future profits of their good to rise they will decrease the supply of the good now. This will shift the curve to the left.
If the supplier expects future profits of their good to fall they will increase the supply of the good now. This will shift the curve to the right.
6) NUMBER OF SELLERS:
An increase in the number of sellers will shift the supply curve for the product to the right.
The price at which the quantity demanded equals the quantity supplied is called the equilibrium price.
Notice that equilibrium is defined as a state of balance between opposing forces
Shortage:
In this case the producer has set the price too low. This means quantity demanded is much higher than quantity supplied.
This market is not in equilibrium. As sellers realize they can not keep the product on the shelves, they will raise the price. The market will work its way to equilibrium.
Surplus
In this case the producer has set the price too high. This means quantity demanded is much lower than quantity supplied.
This market is not in equilibrium. As sellers realize they are not selling as much of their product as they want at this price, they will lower the price. The market will work its way to equilibrium.
What happens to equilibrium when one of the determinants of demand change?
In this case a determinant of demand causes an increase in demand. This caused the price to increase and the quantity to increase.
Decrease in Demand
Can you draw a decrease in demand?
What happens to equilibrium when the one of the determinants of supply change?
In this case a determinant of supply causes an increase in supply. This caused the price to decrease and the quantity to increase.
Can you draw a decrease in supply?
PRICE CEILING: The maximum legal price a seller may charge for a product or service.
This allows people to purchase G&S at a lower price than they would have otherwise been able to get it for. This allows many a chance to afford these things.
A price ceiling is below equilibrium point.
Notice that a ceiling keeps the price low and does not allow the market to drive the price up. This keeps buyers in the market that would have otherwise gotten out. At that price the quantity supplied and the quantity demanded cannot reach equilibrium. Hence a shortage.
PRICE FLOORS: Minimum prices fixed by government which are above equilibrium prices.
Ex: minimum wage, price floors of agriculture products.
Notice that the floor keeps the price above the equilibrium. Suppliers are willing to increase Qs at this artificial price while some demanders are driven out of the market. The net result is a surplus.
Consumer Surplus: the difference between the market price and the maximum price the consumer would pay to obtain that unit
Producer Surplus: the difference between the market price and the minimum price the producer would be willing to take for the product.
What happens when both supply and demand change?
In economics we do not deal with absolute terms. That means we do not really know how far the curves shift. This means that any time you shift both curves, either Quantity or Price will not be able to be determined. (Indeterminant)
With and increase in S and an increase in D Quantity increases and price is indeterminant.
With and decrease in S and an decrease in D Quantity decreases and price is indeterminant.
Decrease D and Increase supply means that Price decrease and Q is indeterminant.
Increase D and Decrease supply means that Price increase and Q is indeterminant.
Dead weight loss from price ceilings
Consumer Surplus before the ceiling
Producer Surplus before ceiling
Combined consumer and producer surplus before ceiling
Combined consumer and producer surplus after the ceiling
Therefore bfc is the dead weight loss. It is lost consumer and producer surplus.
Unit 2: Lesson 5 (Activities 20-23)
Discuss the subject of the slope of a line. How is it found? (rise over run) or the vertical axis divided by the horizontal axis. Notice that this is elasticity.
The responsiveness, or sensitivity, of consumers to a change in the price of a product is measured by the concept of Price elasticity of demand. Simply put, if consumers respond (relatively) to a change in price it is said to be elastic. If they do not respond (relatively) to a change in price the product is said to be inelastic.
There are four things that go into determining the elasticity of a demand curve.
1) Luxuries versus necessities. This is what we have been discussing. Your quantity demanded for heart surgery will not change much with the change in price.
Ex of elastic demands: Sports cars, riding lawn mowers, V.C.R's.
Ex of inelastic demands: food, electricity, health care.
2) Availability of substitutes. The greater the number of substitute the more elastic the product. If the price of beef went way up you would just switch to chicken. Therefore we can say that the demand curve for beef is very elastic. Its quantity demanded changes with a change in price.
elastic: c.d.'s, sugar,
inelastic: U.S. mail, local telephone company, gasoline
3) Proportion of income. The greater the price of a good relative to one's budget, the greater the elasticity of demand. If the price for candy bars increased 10% (or 4 cents) your quantity demanded would not change much. However if the price of a 100,000-dollar house increase 10% (or $10,000) your quantity demanded would most likely change a lot. A house would have an inelastic demand curve.
elastic: automobiles, houses, boats
inelastic: soft drinks, computer disks
4) Time: The longer the time period the more elastic a demand curve becomes. A person will not run out and buy a smaller car if the price of gas goes up. Instead they will wait until their older car wears out.
Have students do Activity 21. Answer any questions they have about elasticity.
Examples of Elastic curves: steak, ice cream, riding lawn mowers...
Examples of Inelastic curves: water, electricity, medicine...
Ask what happens when price decreases? Qd increases. The measurement of the responsiveness to this price change is elasticity.
What would you expect elasticity to be if the price decreased by 1% and Qd increased by 4%. (ELASTIC)
A one percent change in price leads to a smaller change in Qd is inelastic.
Percent Change: Old-New
Old
Ed= % change in quantity demanded of product X
% change in price of product X
This is the same as saying
Ed= change in quantity demanded of X / change in price of X
original quantity demanded of X original price of X
Midpoint Formula:
Ed = change in quantity demanded divided by change in price
sum of quantities/2 sum of prices/2
Because of the law of demand this number will always be negative. Ignore negatives.
This number tells us that a 1% change in price leads to a x percent change in Qd.
Less than one is inelastic. More than one is elastic. One is unitary.
(Notice that this will always yield a negative number. Ignore this.)
Demand is elastic if a given percentage change in price results in a larger percentage change in quantity demanded. ( a 4% increase in price results in a 8% decline in QD.)
Demand is inelastic if a given percentage change in price is accompanied by a relatively smaller change in quantity demanded. ( a 4% increase in price results in a 2% decline in Q.D.)
When a given percentage change in price is accompanied by an identical change in quantity demanded this is said to be unitary elastic.
A good is perfectly inelastic when there will be no change in quantity demanded no matter what the % change in price. ex. medicine
A good is perfectly elastic when there is a major change in quantity demanded when there is a small % change in the price. ex:
The Total-Revenue Test
If demand is elastic a decrease in price will result in an increase in total revenue. This means that at the lower price more units are being bought. This offsets the lower price.
TR = P x Q
When you calculate TR you can look at it graphically.
If demand is elastic a change in price will result in a change in TR in the opposite direction.
If a 3% decrease in price leads to a 5% increase in Q. 5% divided by 3% is elastic. This means TR will be going up.
If demand is inelastic a change in price will result in a change in TR in the same direction. (Ex: If price increases total revenue will also increase. People cannot do without the product so they will buy it no matter how high the price.) If a 5% decrease in price leads to a 3% increase in Q. 3% divided by 5% is inelastic. This means TR will be going down.
If demand is unitary elastic a change in price will have no change in total revenue.
Price Elasticity of Supply:
If suppliers are responsive to price changes the supply is elastic.
If suppliers are not responsive to price change the supply is inelastic.
This is the exact formula used in Ed except you substitute supply for demand.
Es = change in quantity supplied divided by change in price
sum of quantities/2 sum of prices/2
1) Suppliers cannot respond immediately to price changes (as can demanders) once a computer is made the supplier will sell it even if the prices drop drastically. (They will take a large loss rather than a total loss.)
Notice because of the law of supply this number will always be positive so you do not have to worry about negatives.
In dealing with price elasticity you are dealing with movement along the curves. For Cross Elasticity and Income Elasticity you are dealing with movement along the curves.
CROSS ELASTICITY OF DEMAND: measures how sensitive consumer purchases of one product are to the change in price of some other product.
Exy= % change in quantity demanded of product X
% change in price of product Y
DO NOT IGNORE NEGATIVES HERE
If cross elasticity is positive: quantity demanded of X varies directly with the price of Y then X and Y are substitute goods.
Ex: If the price of steak increase then people will buy more hamburger.
If cross elasticity is negative: quantity demanded of X varies inversely with the price of Y then X and Y are complementary goods.
Ex: If the price of CD's goes way up then the quantity purchases of CD players will go down.
If the cross elasticity is near zero then the goods are independent goods and are unrelated.
Ex: If the price of sugar goes up it will have no effect on the price of paper.
INCOME ELASTICITY OF DEMAND: measures the percent change in quantity of product demanded which results from the percent change in consumer income.
Ey= % change in quantity demand
% change in income
DO NOT IGNORE NEGATIVES HERE
Remember that income is one of the determinants of demand. When income changes you get a change in demand rather than a chance in quantity demanded.
For normal or superior goods the higher the income the more of a product a person will purchase. (The higher the Ei the more likely that people will purchase the good as the income increases.) This will yield a positive number.
For inferior goods the Ei will be low. The higher the income the less likely they will purchase the good or service. (used cloths, ...) This will yield a negative number.
Honors World History Notes Unit 1 part A
Reading Assignment A handout is the first part of your unit 1 notes--don't lose it!
Notes continue:
After the fall of Sumer, a series of foreign invasions swept the region.
•Semitic nomads moved into northern Mesopotamia and settled at Akkad (just north of the major Sumerian city-states) around 5000 BC
•2300 BC Sargon I seizes power and launches invasions across Mesopotamia
•Adopted Sumerian customs while maintaining Akkadian language
After the death of Sargon’s grandson, Naram-Sin, the empire began to collapse.
•Another Semitic group from eastern Syria, the Amorites, conquer the region
•Conquered the Sumerian city-states to the south
•Established capital at Babylon
•Greatest expansion and growth under King Hammurabi
•Strong leader who united most of Mesopotamia
•Growth of trade and agriculture
•Hammurabi is most famous for his written code of laws--282 sections with laws from around the region—created a type of equity of law
•Specific laws with harsh punishments kept harmony
•Similar class system to Sumer with laws/punishments differing for each class
•Borrowed heavily from Sumerian culture and adopted cuneiform to their Semitic language
•After Hammurabi’s death, empire collapsed
•Successors unable to keep empire together
•Hittite invasion destroyed Babylon
The Egyptians
•Kemet (Black Land) of the Nile River Valley
•5000 BC, nomads began settling along the Nile
•Farming villages that grew wheat and barley
•Series of tribal kingdoms develop
•Early Egypt divided into north and south
•Lower Egypt in the north where Nile empties into Mediterranean
•Upper Egypt in the south bordering Ethiopia
•Narmer (Menes), king of Upper Egypt conquered Lower Egypt around 3000 BC w/capital at Memphis
•2700 BC to 2200 BC the two kingdoms began to merge identities under one central government
•Theocracy evolved with a king and his bureaucracy
•First pyramids built during this time as tombs for the kings
•Old Kingdom collapsed due to infighting of nobles
•First Dark Ages from 2200 BC to 2050 BC
•New Dynasty seized power in 2050 BC to establish the Middle Kingdom with capital at Thebes
•Expansion of territory into Nubia (Sudan) and Syria
•Around 1700 BC, invaders from southwest Asia attacked Egypt, beginning the Second Dark Ages
•Hyksos conquered Egypt with bronze weapons and horse drawn chariots (Egyptians fought on foot with copper and stone weapons)
•Around 1600 BC, Ahmose led the revolt against Hyksos rule and drove them out
•Ahmose was the first ruler of the New Kingdom, first to use the title pharaoh (great house of the king)
•Ahmose rebuilt Egypt to even greater glory
•Around 1480 BC, Hatshepsut came to power when her husband Thutmose II (her half brother) died.
•Her stepson (born to Thutmose II and a harem girl) was too young to rule
•She became Regent of Egypt
•About 7 years into her regency, she proclaimed herself pharaoh and wore men’s clothing and the false beard
•Why? Now believe there were several coup attempts against her and her stepson
•Had to take on the persona of a male pharaoh to gain legitimacy and acceptance
Huge building programs under her reign, including the Valley of the Kings
•Thutmose III became pharaoh upon her death
•Unlike his stepmother, focused on military and conquest
•Conquered northern Mesopotamia and parts of central Africa
•Huge wealth came into Egypt from conquered areas
•After Thutmose III died, series of weak pharaohs brought about decline
•Saved from destruction by Ramses II who fought off Hittite invasion at the Battle of Kadesh
•Treaty signed between two nations calling for truce and alliance
•After Ramses II died in 1237 BC, Egypt began to decline and later destroyed by Seafaring raiders from the Mediterranean
•Finally conquered by Libyans from the west and Kushites from the south
•Similar to Sumer:
a)Upper class—nobility and priests
b)Middle class—artisans, merchants, scribes
c)Lower class—farmers and laborers
d)slaves
•Polytheistic
•Greater focus on afterlife
•Idea of god/king
•Religion evolved over time to include afterlife for all people
•Originally only royalty and nobility had an afterlife, but by the New Kingdom the concept was universal
•Writing with pictures
•Also hieratic for day-to-day transactions (simplified version)
•Scribes
•Papyrus paper
•Mathematics—geometry
•Calendar with 365 days
•Embalming and surgeries
•medicines
Ancient China
•Oldest continuous civilization in the world
•Began around 3000 BC along river valleys
•Most important along Huang He (Yellow) River
•Developed in virtual isolation from rest of the world “Middle Kingdom”—center of universe
•Mountains, sea, and desert provide some protection and isolation
•Vulnerable to northwest
•River valleys 1. Yellow(Huang Ho) earliest civilization - damaging floods 2. Yangtze- very important in unification- transportation- irrigation
•According to legend, China founded by Yu the Great, who began the Xia Dynasty.
•No archaeological evidence
•First documented dynasty is the Shang (1700-1000 BC)
•Earliest- Neolithic- Ban Po- similar to other parts of the world/ one of the oldest
•Shang Dynasty 1500-11 BCE in N China along the Huang He- raised silk worms- silk part of lure and fascination of China, famous for bronze sculpture, daggers, jade jewelry paid homage to ancestors- family important
•Chou (Zhou) 1027-256, longest-developed foundations for Chinese society
•Mandate of Heaven—good/bad events were result of rulers abilities
•Created Divine Right concept, but with idea that bad rulers would lose mandate and should be deposed
•Dynastic kingdoms
•Complex written language
•Bronze tools and weaponry
•Shang Dynasty plagued by weak rulers in later years
•Finally overthrown by Wu, who established the Zhou Dynasty which lasted over 800 years
Indus Valley (Harappan) Civilization
•Outside contact more limited
•Kyber Pass connection to outside via trade
•Harappa, Mohenjo-Daro
–Largest Cities (40K – 100K)
•The cities are well known for their impressive, organized and regular layout.
•They have well laid our plumbing and drainage system, including indoor toilets.
•Population of between 100-200k each
•Over one hundred other towns and villages also existed in this region.
•Nanga Parbat and numerous other glacier draped mountains of the Himalaya, Karakorum and Hindu Kush provide a continuous source of water for the Indus and its tributaries.
•These mountain ranges also provided important timber, animal products, and minerals, gold, silver, tin and semiprecious stones that were traded throughout the Indus Valley.
•Literate society (writings on bricks and seals)
•Master-planned cities as focal point
•Water system
•Strong central government
•Polytheistic
•Written language
•Pottery, cotton, cloth
•Standard weights and measurements
•Grain storage
•Artifacts and clues discovered at Mohenjo-Daro have allowed archaeologists to reconstruct this civilization.
•The similarities in plan and construction between Mohenjo-Daro and Harappa indicate that they were part of a unified government with extreme organization.
–Both cities were constructed of the same type and shape of bricks.
–The two cities may have existed simultaneously and their sizes suggest that they served as capitals of their provinces.
–In contrast to other civilizations, burials found from these cities are not magnificent; they are more simplistic and contain few material goods.
–This evidence suggests that this civilization did not have social classes.
–Remains of palaces or temples in the cities have not been found.
–No hard evidence exists indicating military activity; it is likely that the Harappans were a peaceful civilization.
–The cities did contain fortifications and the people used copper and bronze knives, spears, and arrowheads.
•The Harappan people were literate and used the Dravidian language.
•The Indus (or Harappan) people used a pictographic script. Some 3500 specimens of this script survive in stamp seals carved in stone, in moulded terracotta and faience amulets, in fragments of pottery, and in a few other categories of inscribed objects.
•In addition to the pictographic signs, the seals and amulets often contain iconographic motifs, mostly realistic pictures of animals apparently worshipped as sacred, and a few cultic scenes, including anthropomorphic deities and worshippers.
•This material is of key importance to the investigation of the Harappan language and religion, which continue to be among the most vexing problems of South Asian protohistory.
•The Mesopotamian model of irrigated agriculture was used to take advantage of the fertile grounds along the Indus River.
•Earthlinks were built to control the river's annual flooding. Crops grown included wheat, barley, peas, melons, and sesame.
•This civilization was the first to cultivate cotton for the production of cloth. Several animals were domesticated including the elephant which was used for its ivory.
•Cities abandoned, reason unknown
•domination of an indigenous people ?
–who rebelled ?
•foreign invasion?
•gradual decline ?
•climate shift: the monsoon patterns
•flooding
•destruction of the forests
•migrations of new peoples: the Aryans
•Climatologists have recently discovered that the monsoon patterns changed dramatically during the period 2000-1500 BC.
•Long term drought with few monsoon storms
•Conclusion: Harappan civilization most likely fell victim to climate change
•Population shifted southward and eastward
•Beginning 2000 BC, an Indo-European group began migrating from central Asia (modern Turkmenistan) toward India.
•One branch settled in modern Iran/Afghanistan, another moved further south and eastward through the Khyber Pass into India/Pakistan.
•From Caucasus Mtns. Black/Caspian Sea
•Aryans – Lighter Skinned
•Dravidians - Darker
•Nomads who settled
•Vedas, Upanashads, Rig Veda
•Sacred/historical texts of Aryans
– basis for Hinduism
•Caste system
•warriors, priests, peasants
•later re-ordered: Brahmins (priests), warriors, landowners-merchants, peasants, untouchables (out castes)
Notes continue:
After the fall of Sumer, a series of foreign invasions swept the region.
•Semitic nomads moved into northern Mesopotamia and settled at Akkad (just north of the major Sumerian city-states) around 5000 BC
•2300 BC Sargon I seizes power and launches invasions across Mesopotamia
•Adopted Sumerian customs while maintaining Akkadian language
After the death of Sargon’s grandson, Naram-Sin, the empire began to collapse.
•Another Semitic group from eastern Syria, the Amorites, conquer the region
•Conquered the Sumerian city-states to the south
•Established capital at Babylon
•Greatest expansion and growth under King Hammurabi
•Strong leader who united most of Mesopotamia
•Growth of trade and agriculture
•Hammurabi is most famous for his written code of laws--282 sections with laws from around the region—created a type of equity of law
•Specific laws with harsh punishments kept harmony
•Similar class system to Sumer with laws/punishments differing for each class
•Borrowed heavily from Sumerian culture and adopted cuneiform to their Semitic language
•After Hammurabi’s death, empire collapsed
•Successors unable to keep empire together
•Hittite invasion destroyed Babylon
The Egyptians
•Kemet (Black Land) of the Nile River Valley
•5000 BC, nomads began settling along the Nile
•Farming villages that grew wheat and barley
•Series of tribal kingdoms develop
•Early Egypt divided into north and south
•Lower Egypt in the north where Nile empties into Mediterranean
•Upper Egypt in the south bordering Ethiopia
•Narmer (Menes), king of Upper Egypt conquered Lower Egypt around 3000 BC w/capital at Memphis
•2700 BC to 2200 BC the two kingdoms began to merge identities under one central government
•Theocracy evolved with a king and his bureaucracy
•First pyramids built during this time as tombs for the kings
•Old Kingdom collapsed due to infighting of nobles
•First Dark Ages from 2200 BC to 2050 BC
•New Dynasty seized power in 2050 BC to establish the Middle Kingdom with capital at Thebes
•Expansion of territory into Nubia (Sudan) and Syria
•Around 1700 BC, invaders from southwest Asia attacked Egypt, beginning the Second Dark Ages
•Hyksos conquered Egypt with bronze weapons and horse drawn chariots (Egyptians fought on foot with copper and stone weapons)
•Around 1600 BC, Ahmose led the revolt against Hyksos rule and drove them out
•Ahmose was the first ruler of the New Kingdom, first to use the title pharaoh (great house of the king)
•Ahmose rebuilt Egypt to even greater glory
•Around 1480 BC, Hatshepsut came to power when her husband Thutmose II (her half brother) died.
•Her stepson (born to Thutmose II and a harem girl) was too young to rule
•She became Regent of Egypt
•About 7 years into her regency, she proclaimed herself pharaoh and wore men’s clothing and the false beard
•Why? Now believe there were several coup attempts against her and her stepson
•Had to take on the persona of a male pharaoh to gain legitimacy and acceptance
Huge building programs under her reign, including the Valley of the Kings
•Thutmose III became pharaoh upon her death
•Unlike his stepmother, focused on military and conquest
•Conquered northern Mesopotamia and parts of central Africa
•Huge wealth came into Egypt from conquered areas
•After Thutmose III died, series of weak pharaohs brought about decline
•Saved from destruction by Ramses II who fought off Hittite invasion at the Battle of Kadesh
•Treaty signed between two nations calling for truce and alliance
•After Ramses II died in 1237 BC, Egypt began to decline and later destroyed by Seafaring raiders from the Mediterranean
•Finally conquered by Libyans from the west and Kushites from the south
•Similar to Sumer:
a)Upper class—nobility and priests
b)Middle class—artisans, merchants, scribes
c)Lower class—farmers and laborers
d)slaves
•Polytheistic
•Greater focus on afterlife
•Idea of god/king
•Religion evolved over time to include afterlife for all people
•Originally only royalty and nobility had an afterlife, but by the New Kingdom the concept was universal
•Writing with pictures
•Also hieratic for day-to-day transactions (simplified version)
•Scribes
•Papyrus paper
•Mathematics—geometry
•Calendar with 365 days
•Embalming and surgeries
•medicines
Ancient China
•Oldest continuous civilization in the world
•Began around 3000 BC along river valleys
•Most important along Huang He (Yellow) River
•Developed in virtual isolation from rest of the world “Middle Kingdom”—center of universe
•Mountains, sea, and desert provide some protection and isolation
•Vulnerable to northwest
•River valleys 1. Yellow(Huang Ho) earliest civilization - damaging floods 2. Yangtze- very important in unification- transportation- irrigation
•According to legend, China founded by Yu the Great, who began the Xia Dynasty.
•No archaeological evidence
•First documented dynasty is the Shang (1700-1000 BC)
•Earliest- Neolithic- Ban Po- similar to other parts of the world/ one of the oldest
•Shang Dynasty 1500-11 BCE in N China along the Huang He- raised silk worms- silk part of lure and fascination of China, famous for bronze sculpture, daggers, jade jewelry paid homage to ancestors- family important
•Chou (Zhou) 1027-256, longest-developed foundations for Chinese society
•Mandate of Heaven—good/bad events were result of rulers abilities
•Created Divine Right concept, but with idea that bad rulers would lose mandate and should be deposed
•Dynastic kingdoms
•Complex written language
•Bronze tools and weaponry
•Shang Dynasty plagued by weak rulers in later years
•Finally overthrown by Wu, who established the Zhou Dynasty which lasted over 800 years
Indus Valley (Harappan) Civilization
•Outside contact more limited
•Kyber Pass connection to outside via trade
•Harappa, Mohenjo-Daro
–Largest Cities (40K – 100K)
•The cities are well known for their impressive, organized and regular layout.
•They have well laid our plumbing and drainage system, including indoor toilets.
•Population of between 100-200k each
•Over one hundred other towns and villages also existed in this region.
•Nanga Parbat and numerous other glacier draped mountains of the Himalaya, Karakorum and Hindu Kush provide a continuous source of water for the Indus and its tributaries.
•These mountain ranges also provided important timber, animal products, and minerals, gold, silver, tin and semiprecious stones that were traded throughout the Indus Valley.
•Literate society (writings on bricks and seals)
•Master-planned cities as focal point
•Water system
•Strong central government
•Polytheistic
•Written language
•Pottery, cotton, cloth
•Standard weights and measurements
•Grain storage
•Artifacts and clues discovered at Mohenjo-Daro have allowed archaeologists to reconstruct this civilization.
•The similarities in plan and construction between Mohenjo-Daro and Harappa indicate that they were part of a unified government with extreme organization.
–Both cities were constructed of the same type and shape of bricks.
–The two cities may have existed simultaneously and their sizes suggest that they served as capitals of their provinces.
–In contrast to other civilizations, burials found from these cities are not magnificent; they are more simplistic and contain few material goods.
–This evidence suggests that this civilization did not have social classes.
–Remains of palaces or temples in the cities have not been found.
–No hard evidence exists indicating military activity; it is likely that the Harappans were a peaceful civilization.
–The cities did contain fortifications and the people used copper and bronze knives, spears, and arrowheads.
•The Harappan people were literate and used the Dravidian language.
•The Indus (or Harappan) people used a pictographic script. Some 3500 specimens of this script survive in stamp seals carved in stone, in moulded terracotta and faience amulets, in fragments of pottery, and in a few other categories of inscribed objects.
•In addition to the pictographic signs, the seals and amulets often contain iconographic motifs, mostly realistic pictures of animals apparently worshipped as sacred, and a few cultic scenes, including anthropomorphic deities and worshippers.
•This material is of key importance to the investigation of the Harappan language and religion, which continue to be among the most vexing problems of South Asian protohistory.
•The Mesopotamian model of irrigated agriculture was used to take advantage of the fertile grounds along the Indus River.
•Earthlinks were built to control the river's annual flooding. Crops grown included wheat, barley, peas, melons, and sesame.
•This civilization was the first to cultivate cotton for the production of cloth. Several animals were domesticated including the elephant which was used for its ivory.
•Cities abandoned, reason unknown
•domination of an indigenous people ?
–who rebelled ?
•foreign invasion?
•gradual decline ?
•climate shift: the monsoon patterns
•flooding
•destruction of the forests
•migrations of new peoples: the Aryans
•Climatologists have recently discovered that the monsoon patterns changed dramatically during the period 2000-1500 BC.
•Long term drought with few monsoon storms
•Conclusion: Harappan civilization most likely fell victim to climate change
•Population shifted southward and eastward
•Beginning 2000 BC, an Indo-European group began migrating from central Asia (modern Turkmenistan) toward India.
•One branch settled in modern Iran/Afghanistan, another moved further south and eastward through the Khyber Pass into India/Pakistan.
•From Caucasus Mtns. Black/Caspian Sea
•Aryans – Lighter Skinned
•Dravidians - Darker
•Nomads who settled
•Vedas, Upanashads, Rig Veda
•Sacred/historical texts of Aryans
– basis for Hinduism
•Caste system
•warriors, priests, peasants
•later re-ordered: Brahmins (priests), warriors, landowners-merchants, peasants, untouchables (out castes)
Monday, August 10, 2009
AP Macro Unit I Notes part B
The idea of any economic system is to answer the fundamental questions of what, how, and for whom to produce.
Capitalist Ideology:
A capitalist society must have:
1) Private Property: Individuals must have free control of property. They must be able to control, use and dispose of that property as they see fit.
2) Freedom of Enterprise and choice: must be able to produce and sell Goods and Services. There should be no government restrictions.
Owners must be able to use Goods and services in any way they see fit.
Workers must have access to any occupation they see fit.
Consumers must have access to all goods and services (at a price)
3) Role of Self Interest:
All parties must be free to try and get the most out of the system. (seller tries to get a high price while the buyer tries to get a low price.
4) Competition: Large number of buyers and sellers each free to enter and exit the market
If you have a large number of buyers and sellers this means none will be able to influence the price. (WHAT will happen if one seller decided to increase the price of his goods?)
5) Markets and Prices:
Capitalism is a market economy.
Market: simple mechanism or arrangement which brings buyers (demanders) and sellers (suppliers) of goods and services together.
Though price, the market decides what is to be produced, for whom and how.
6) Limited Government Interaction:
The market must be self regulating. As soon as government steps in it upsets the balance.
7) Use of capital goods:
Capital Goods: goods used in production (buildings, equipment...)
8) Division of Labor:
Individuals specialize in tasks. They then allow others to do jobs for them.
9) Use of Money as a medium of exchange. (very little bartering)
10) Specialization of tasks: We produce very little of what we consume. Instead we trade our services for money and money for goods and services.
Traditional Economy
Allocation of scarce resources stems from ritual, habit and custom. Individuals are not free to make decisions based on their wants. Roles are defined by the customs of their ancestors. Strengths: Everyone knows WHAT to produce, HOW to produce and FOR WHOM to produce. Life is stable, predictable and continuous.
Weakness: Discourages new ideas. Lack of progress usually leads to a lower standard of living. Traditional economies offer few choices.
Command Economy
A central authority (usually government) makes decisions. The people are expected to follow the commands of the authority. The central authority defines their needs and wants.
Strengths: If circumstance requires a quick change in allocation of resource it can meet this need rapidly.
Weaknesses: They are not designed to meet the wants and needs of the people. People have little incentive to work hard in a command economy because they will get paid by meeting quota. Require huge bureaucracies to make decisions. This slows the day to day decisions. It also raises costs. Little flexibility to deal with day to day problems. Decisions must be made with approval from above. People have trouble getting ahead in a command economy.
Market Economy
People and business decide how to allocate resources. A market allows buyers and sellers to meet to exchange goods and services. The dollar forces decisions instead of central authority or customs.
Strengths Markets can adjust over time. Producers can decide WHAT to produce and HOW to produce. This leads to greater efficiency in the market. Small degree of Government interference. Individual decisions direct the use of scare resources. A very large variety of goods will be produced because there are buyers. Both majority and minority get what they want.
Weakness: The FOR WHOM part is weak. Sometimes competition is not as great as it should be. If market fail to meet needs and wants this system breaks down. It only rewards production, so those who do not produce suffer. (Young, old, sick.)
Chapter 19 (section 1)
Capitalism: an economic system in which private individuals and businesses own the factors of production. Supply and demand determines the prices in a capitalist economy.
Advantages of Capitalism: More efficient than communism and socialism Produces more, higher quality goods at lower prices than other two systems. Allows for individual freedom. People are allowed to use their time, energy, talent, and resources as they see fit People can keep profits if they make them Capitalist economies are flexible People will not buy the products if they do not want them so……. Business is motivated to listen to consumer Suppliers must find product people want or go out of business Consumer is sovereign Suppliers have to adjust to meet consumer demands.
Disadvantages of Capitalism: Pure capitalism does not meet the needs of the least skilled, the disabled, the young, old or least productive.
Socialism: many of the basic productive resources are government owned and operated. Prices play a major role in distribution.
Advantages of Socialism: Takes care of those that can not afford the benefits of society People elect officials who make economic decisions.
Disadvantages of Socialism: Less efficient because business have no incentive to cut costs. Special interests often take over.
Communism: both a political and economic framework, all property is collectively owned and labor is organized for the common advantage of the community.
In theory goods and services have no prices so there is no need for payment for the factors of production.
Advantages of Communism: Workers can not be fired. Many pubic good provide
Disadvantages of Communism: Individual freedom is lost. (little or no freedom to choose jobs or change jobs) Lack of incentives to produce what is wanted by society Inefficiency of centralized planning.
Unit 1 Lesson 4
Absolute and Comparative Advantage
Input vs. Output:
Output problems state that you get a certain amount of product out of a given input. Examples miles per gallon, pieces of gum per dollar...
Input problems state that it takes a certain amount of input to get a given product. Examples are hours to do a job, apples to make a pie,
Absolute Advantage:
For output problems you look at if one nation (individual/company) can produce more output with the same resources as the other.
For Input Problem: you look at who uses the least amount of input to get the output.
You can see that Ted can produce 70 tons in an hour while Nancy can only produce 40 tons of milk in an hour. It makes sense that Ted should produce Milk because he has the absolute advantage in milk
On the other hand Nancy can produce 45 tons of cheese to Teds 15 tons. Therefore Nancy produces Cheese. She has the absolute advantage in Cheese.
For Input Problem: you look at who uses the least amount of input to get the output.
You can see that it takes X 2 hours to build a car and Z 3 hours. Therefore X should build the car. It takes Z one hour to build a tank but it takes X 2 hours. Therefore Z should build tanks.
Comparative Advantage:
One nation (individual/company) can produce a good at a lower opportunity cost than the other. This comes into play when one individual (nation, company....) has the absolute advantage in both.
Using numbers to calculate who has comparative advantage
Output method: put the output of each product over the output of the other product for the same person. This makes a fraction. Look at the opportunity cost. The person with the lowest opportunity cost should produce the good that costs the least.
Example:
Notice that Mike can produce more Corn and Wheat. He has absolute advantage in both. Does this mean he should produce both. NO!!! He should produce the one that he has comparative advantage in and then trade for the other.
You will never have a situation where someone has comparative advantage in both!!!!!
Input Method: divide the input required for each product into the input for the other product. Then take the one with the lowest opportunity cost.
Based on this we can see that it takes Jeff less apples to make a pie than Judy. It takes the same amount to make juice. You must then figure out who has absolute advantage. Reduce it:
5/3 is less than 6/3 so Jeff should produce pie. 3/6 is less than 3/5 so Judy should produce Juice.
People trade because both parties benefit from voluntary exchanges. This is true even if one nation has both a comparative and absolute advantage.
Terms of Trade: the rate by which one unit of a good or service is traded for another unit of a good or service such that they do better trading than they do on their own.
Why Specialize?
1. more efficient use of resources
2. increased production without increase in resources
3. increase division of labor
What happens to the production possibility curve when specialization occurs? (It is actually a trading possibilities curve.)
Circular Flow Diagram:
Two groups of decision makers: Households and Business (later the government will be added.)
The market coordinates these two groups.
The upper half of the diagram portrays the resource market (also called factor market). It is through the resource market that households supply the resources for the business. (Land, Labor, Capital, Entrepreneurial Ability) Notice that through this market that the business demand resources.
The lower portion of the diagram represents the product market. It is through this market that the households spend the money they receive through he resource market. Here the household is the demander and the businesses are the suppliers.
Scarcity and opportunity costs enter in this market through the supply of resources by the households. They only have a limited amount of resources to provide and therefore have an opportunity cost in everything
they provide.
When you write a free response question in this class each question must be answered on a separate piece of paper. They must be labeled clearly so that I can tell what question and what part they are working on. Graphs must be at least 7 lines big or I will not give you credit!
Capitalist Ideology:
A capitalist society must have:
1) Private Property: Individuals must have free control of property. They must be able to control, use and dispose of that property as they see fit.
2) Freedom of Enterprise and choice: must be able to produce and sell Goods and Services. There should be no government restrictions.
Owners must be able to use Goods and services in any way they see fit.
Workers must have access to any occupation they see fit.
Consumers must have access to all goods and services (at a price)
3) Role of Self Interest:
All parties must be free to try and get the most out of the system. (seller tries to get a high price while the buyer tries to get a low price.
4) Competition: Large number of buyers and sellers each free to enter and exit the market
If you have a large number of buyers and sellers this means none will be able to influence the price. (WHAT will happen if one seller decided to increase the price of his goods?)
5) Markets and Prices:
Capitalism is a market economy.
Market: simple mechanism or arrangement which brings buyers (demanders) and sellers (suppliers) of goods and services together.
Though price, the market decides what is to be produced, for whom and how.
6) Limited Government Interaction:
The market must be self regulating. As soon as government steps in it upsets the balance.
7) Use of capital goods:
Capital Goods: goods used in production (buildings, equipment...)
8) Division of Labor:
Individuals specialize in tasks. They then allow others to do jobs for them.
9) Use of Money as a medium of exchange. (very little bartering)
10) Specialization of tasks: We produce very little of what we consume. Instead we trade our services for money and money for goods and services.
Traditional Economy
Allocation of scarce resources stems from ritual, habit and custom. Individuals are not free to make decisions based on their wants. Roles are defined by the customs of their ancestors. Strengths: Everyone knows WHAT to produce, HOW to produce and FOR WHOM to produce. Life is stable, predictable and continuous.
Weakness: Discourages new ideas. Lack of progress usually leads to a lower standard of living. Traditional economies offer few choices.
Command Economy
A central authority (usually government) makes decisions. The people are expected to follow the commands of the authority. The central authority defines their needs and wants.
Strengths: If circumstance requires a quick change in allocation of resource it can meet this need rapidly.
Weaknesses: They are not designed to meet the wants and needs of the people. People have little incentive to work hard in a command economy because they will get paid by meeting quota. Require huge bureaucracies to make decisions. This slows the day to day decisions. It also raises costs. Little flexibility to deal with day to day problems. Decisions must be made with approval from above. People have trouble getting ahead in a command economy.
Market Economy
People and business decide how to allocate resources. A market allows buyers and sellers to meet to exchange goods and services. The dollar forces decisions instead of central authority or customs.
Strengths Markets can adjust over time. Producers can decide WHAT to produce and HOW to produce. This leads to greater efficiency in the market. Small degree of Government interference. Individual decisions direct the use of scare resources. A very large variety of goods will be produced because there are buyers. Both majority and minority get what they want.
Weakness: The FOR WHOM part is weak. Sometimes competition is not as great as it should be. If market fail to meet needs and wants this system breaks down. It only rewards production, so those who do not produce suffer. (Young, old, sick.)
Chapter 19 (section 1)
Capitalism: an economic system in which private individuals and businesses own the factors of production. Supply and demand determines the prices in a capitalist economy.
Advantages of Capitalism: More efficient than communism and socialism Produces more, higher quality goods at lower prices than other two systems. Allows for individual freedom. People are allowed to use their time, energy, talent, and resources as they see fit People can keep profits if they make them Capitalist economies are flexible People will not buy the products if they do not want them so……. Business is motivated to listen to consumer Suppliers must find product people want or go out of business Consumer is sovereign Suppliers have to adjust to meet consumer demands.
Disadvantages of Capitalism: Pure capitalism does not meet the needs of the least skilled, the disabled, the young, old or least productive.
Socialism: many of the basic productive resources are government owned and operated. Prices play a major role in distribution.
Advantages of Socialism: Takes care of those that can not afford the benefits of society People elect officials who make economic decisions.
Disadvantages of Socialism: Less efficient because business have no incentive to cut costs. Special interests often take over.
Communism: both a political and economic framework, all property is collectively owned and labor is organized for the common advantage of the community.
In theory goods and services have no prices so there is no need for payment for the factors of production.
Advantages of Communism: Workers can not be fired. Many pubic good provide
Disadvantages of Communism: Individual freedom is lost. (little or no freedom to choose jobs or change jobs) Lack of incentives to produce what is wanted by society Inefficiency of centralized planning.
Unit 1 Lesson 4
Absolute and Comparative Advantage
Input vs. Output:
Output problems state that you get a certain amount of product out of a given input. Examples miles per gallon, pieces of gum per dollar...
Input problems state that it takes a certain amount of input to get a given product. Examples are hours to do a job, apples to make a pie,
Absolute Advantage:
For output problems you look at if one nation (individual/company) can produce more output with the same resources as the other.
For Input Problem: you look at who uses the least amount of input to get the output.
You can see that Ted can produce 70 tons in an hour while Nancy can only produce 40 tons of milk in an hour. It makes sense that Ted should produce Milk because he has the absolute advantage in milk
On the other hand Nancy can produce 45 tons of cheese to Teds 15 tons. Therefore Nancy produces Cheese. She has the absolute advantage in Cheese.
For Input Problem: you look at who uses the least amount of input to get the output.
You can see that it takes X 2 hours to build a car and Z 3 hours. Therefore X should build the car. It takes Z one hour to build a tank but it takes X 2 hours. Therefore Z should build tanks.
Comparative Advantage:
One nation (individual/company) can produce a good at a lower opportunity cost than the other. This comes into play when one individual (nation, company....) has the absolute advantage in both.
Using numbers to calculate who has comparative advantage
Output method: put the output of each product over the output of the other product for the same person. This makes a fraction. Look at the opportunity cost. The person with the lowest opportunity cost should produce the good that costs the least.
Example:
Notice that Mike can produce more Corn and Wheat. He has absolute advantage in both. Does this mean he should produce both. NO!!! He should produce the one that he has comparative advantage in and then trade for the other.
You will never have a situation where someone has comparative advantage in both!!!!!
Input Method: divide the input required for each product into the input for the other product. Then take the one with the lowest opportunity cost.
Based on this we can see that it takes Jeff less apples to make a pie than Judy. It takes the same amount to make juice. You must then figure out who has absolute advantage. Reduce it:
5/3 is less than 6/3 so Jeff should produce pie. 3/6 is less than 3/5 so Judy should produce Juice.
People trade because both parties benefit from voluntary exchanges. This is true even if one nation has both a comparative and absolute advantage.
Terms of Trade: the rate by which one unit of a good or service is traded for another unit of a good or service such that they do better trading than they do on their own.
Why Specialize?
1. more efficient use of resources
2. increased production without increase in resources
3. increase division of labor
What happens to the production possibility curve when specialization occurs? (It is actually a trading possibilities curve.)
Circular Flow Diagram:
Two groups of decision makers: Households and Business (later the government will be added.)
The market coordinates these two groups.
The upper half of the diagram portrays the resource market (also called factor market). It is through the resource market that households supply the resources for the business. (Land, Labor, Capital, Entrepreneurial Ability) Notice that through this market that the business demand resources.
The lower portion of the diagram represents the product market. It is through this market that the households spend the money they receive through he resource market. Here the household is the demander and the businesses are the suppliers.
Scarcity and opportunity costs enter in this market through the supply of resources by the households. They only have a limited amount of resources to provide and therefore have an opportunity cost in everything
they provide.
When you write a free response question in this class each question must be answered on a separate piece of paper. They must be labeled clearly so that I can tell what question and what part they are working on. Graphs must be at least 7 lines big or I will not give you credit!
Thursday, August 6, 2009
AP Macro Unit 1 notes part A
Micro Unit 1, Lesson 1 (one day)
ECONOMICS: Concerned with the efficient use and management of limited productive resources to achieve maximum satisfaction of human material wants.
ECONOMICS: The study of our behavior in producing, distributing, and consuming material goods and services in a world of scarce resources.
SCARCITY: WANTS EXCEED RESOURCES
ECONOMICS: The study of how limited resources are allocated in a world of unlimited wants.
We want more than we are capable of getting.
MICROECONOMICS: deals with specific economic units and a detailed consideration of these individual units. The economist is placing a specific portion of the economy under a microscope.
MACROECONOMICS: Deals either with the economy as a whole or the basic subdivision or aggregates such as government, household, or business sectors, which make up the economy.
relation v. causation: Just because something happens when something else happens does not mean one caused the other. It may just be that they are correlated. (They are associated in some systematic but dependable way.) It may be that a third variable is the cause yet that variable makes the first two correlated.
An example of this is hot weather and electric bills. When the weather gets hot your parents electric bills go up. These two are not related by causation. (one does not cause the other.) Instead, they are correlated. When the weather gets hot the air conditioners are turned on and this causes the electric bills to go up.
To illustrate the example of ceteris parabus use the example of shooting a bullet out of a gun at an angle. How far does the bullet travel. In physics what do you consider. Velocity, projectory, friction (air pollution)...
CETERIS PARIBUS: Means other things being equal. In economics when you are working on a problem we must assume that only those variables will change. All others remain the same.
Unit One: Lesson 2
Once again, look at the definitions of Economics. Relate this to limited resources.
ECONOMICS: Concerned with the efficient use and management of limited productive resources to achieve maximum satisfaction of human material wants.
ECONOMICS: The study of our behavior in producing, distributing, and consuming material goods and services in a world of scarce resources
SCARCITY: WANTS EXCEED RESOURCES
ECONOMICS: The study of how limited resources are allocated in a world of unlimited wants.
Economics is the study of the distribution of goods and services. It is all based on the idea that we live in a world of unlimited wants with limited or scares resources.
Examples of Resources are:
1) Land: This includes the land and its natural resources
2) Labor: This includes all services of people used in production except Entrepreneurial ability, which will be discussed later.
3) Capital: This is all the things used in production. Can anyone give me examples? (Tools, machinery, equipment, the factory itself...) (Notice that money is not capital because it in itself is useless.)
4) Entrepreneurial Ability: This is the person responsible for taking the first three and combining them into a product or service. He is also the one who bears the risk of the undertaking.
Some assumptions are (CETERIS PARIBUS)
1) Fixed Resources:
2) Fixed Technology:
3) Two Products: (Usually one capital good and one consumer good)
4) We are achieving economic efficiency:
Inside the PPC you would not be at economic efficiency. We might not be at full employment.
This could be that workers that want to work can not find jobs. We are not at FULL EMPLOYMENT.
This also assumes that what is being produced is what we want to be produced.
ALLOCATIVE EFFICIENCY: Resources are devoted to goods most wanted by society.
PRODUCTIVE EFFICIENCY: Least costly production techniques are used to produce wanted goods and services. If you building boats by hand you are not utilizing full production.
Given that we have a world of unlimited wants in a world of limited resources we must decide how to allocate production to satisfy society. We must look at our production possibilities.
Production Possibilities Curve (also called Production Possibility Frontier)
Assume two products
1. What are the tradeoffs involved?
Must give up units of one good in order to produce units of the other.
Notice that if they give up more capital goods for consumer goods they are hurting their future.
2. Why is the PPC concave?
As more and more of a good is produced it takes more away from the other because the resources are not easily converted. (Law of Increasing Opportunity Costs)
3. What does a point inside the curve represent?
A point in which efficiency is not being achieved.
4. Can you think of an example in history when we were inside the PPC?
Great Depression
5. What is the significance of a point outside the PPC.
Without advancements in technology or changes in factors of production this is unattainable for long period of time.
Suppose that additional resources (land, labor, capital and entrepreneurial ability was found. (In other words the economy is expanding.) HOW WOULD THIS AFFECT OUR PPC? (It would shift it outward.)
The same is true for technological advancements
One thing a society must decide is if it wants to produce more goods that will help it advance or more goods that it can consume now. Should we produce at A or B? Either works, it just depends on what society wants. However, A will help you advance quicker in the long run.
6. Under what conditions could the point outside the PPC be reached?
Technological advancements or new resources
Make sure that students understand that no point on the curve is more desirable from an economist standpoint. That gets into societies specific wants, which is outside the scope of the class.
OPPORTUNITY COSTS: THE AMOUNT OF OTHER PRODUCTS WHICH MUST BE FOREGONE OR SACRIFICED TO OBTAIN SOME AMOUNT OF ANY GIVEN PRODUCT.
Ex: In order to have more pizzas we must give up robots. The opportunity of pizzas is therefore robots.
OPPORTUNITY COST: The best alternative forgone. This takes into consideration all types of opportunity costs rather than just production costs. Ex. Study or go on a date
Implicit Costs: Resources that could have been used in the next best alternative. You could be taking team sports or marketing instead of A.P. Economics. You could take a nap tonight instead of studying.
Explicit Costs: These are the measurable costs. It costs $3 for a Big Mac. This is measurable.
Marginal means change.
Broad Social Goals
1. Economic Freedom: The right to choose your own occupation, employer, and use of your money (taxes?). Business owners have the right to produce what they want and how much they want.
2) Economic Efficiency: gains must be more than costs.
Efficiency must continually improve if we expect our standard of living to increase.
Measurement: Corporate Profits, GNP, GDP and Unemployment
3) Economic Equity: Equity means fairness
Illegal to discriminate based on age, race, sex or disability
False advertising, unfair pricing and dangerous products are prohibited.
Measurement: Unemployment, # of discrimination cases, minimum wage
4) Economic Security: protection from layoffs and illness
Measurement: Welfare Total Recipients, Social Security Expenditures, and unemployment rate
5) Full Employment:
If people can not work they can not support their family. Society is hurt.
Unemployment reduces efficiency because factors of production are not being used.
Unemployed people must rely on others for support. (Family, friend, government…)
Measurement: unemployment rate
6) Price Stability
Inflation is a rise in the general level of prices
Inflation reduces every person’s buying power
Inflation is especially difficult for people on fixed incomes (Fixed incomes are incomes that do not rise as prices rise)
Inflation Hurts Savers
Measurement: Consumer Price Index (CPI)
7) Economic Growth: the increasing of our production of goods and services
Is necessary to satisfy the needs and wants of a growing population
Do you want your children to live better than you do?
Do you want to improve the quality of home, medical care, transportation, and clothing….
To do this requires economic growth.
Measurement: GNP, Corporate Profits and Dow Jones IA
ECONOMICS: Concerned with the efficient use and management of limited productive resources to achieve maximum satisfaction of human material wants.
ECONOMICS: The study of our behavior in producing, distributing, and consuming material goods and services in a world of scarce resources.
SCARCITY: WANTS EXCEED RESOURCES
ECONOMICS: The study of how limited resources are allocated in a world of unlimited wants.
We want more than we are capable of getting.
MICROECONOMICS: deals with specific economic units and a detailed consideration of these individual units. The economist is placing a specific portion of the economy under a microscope.
MACROECONOMICS: Deals either with the economy as a whole or the basic subdivision or aggregates such as government, household, or business sectors, which make up the economy.
relation v. causation: Just because something happens when something else happens does not mean one caused the other. It may just be that they are correlated. (They are associated in some systematic but dependable way.) It may be that a third variable is the cause yet that variable makes the first two correlated.
An example of this is hot weather and electric bills. When the weather gets hot your parents electric bills go up. These two are not related by causation. (one does not cause the other.) Instead, they are correlated. When the weather gets hot the air conditioners are turned on and this causes the electric bills to go up.
To illustrate the example of ceteris parabus use the example of shooting a bullet out of a gun at an angle. How far does the bullet travel. In physics what do you consider. Velocity, projectory, friction (air pollution)...
CETERIS PARIBUS: Means other things being equal. In economics when you are working on a problem we must assume that only those variables will change. All others remain the same.
Unit One: Lesson 2
Once again, look at the definitions of Economics. Relate this to limited resources.
ECONOMICS: Concerned with the efficient use and management of limited productive resources to achieve maximum satisfaction of human material wants.
ECONOMICS: The study of our behavior in producing, distributing, and consuming material goods and services in a world of scarce resources
SCARCITY: WANTS EXCEED RESOURCES
ECONOMICS: The study of how limited resources are allocated in a world of unlimited wants.
Economics is the study of the distribution of goods and services. It is all based on the idea that we live in a world of unlimited wants with limited or scares resources.
Examples of Resources are:
1) Land: This includes the land and its natural resources
2) Labor: This includes all services of people used in production except Entrepreneurial ability, which will be discussed later.
3) Capital: This is all the things used in production. Can anyone give me examples? (Tools, machinery, equipment, the factory itself...) (Notice that money is not capital because it in itself is useless.)
4) Entrepreneurial Ability: This is the person responsible for taking the first three and combining them into a product or service. He is also the one who bears the risk of the undertaking.
Some assumptions are (CETERIS PARIBUS)
1) Fixed Resources:
2) Fixed Technology:
3) Two Products: (Usually one capital good and one consumer good)
4) We are achieving economic efficiency:
Inside the PPC you would not be at economic efficiency. We might not be at full employment.
This could be that workers that want to work can not find jobs. We are not at FULL EMPLOYMENT.
This also assumes that what is being produced is what we want to be produced.
ALLOCATIVE EFFICIENCY: Resources are devoted to goods most wanted by society.
PRODUCTIVE EFFICIENCY: Least costly production techniques are used to produce wanted goods and services. If you building boats by hand you are not utilizing full production.
Given that we have a world of unlimited wants in a world of limited resources we must decide how to allocate production to satisfy society. We must look at our production possibilities.
Production Possibilities Curve (also called Production Possibility Frontier)
Assume two products
1. What are the tradeoffs involved?
Must give up units of one good in order to produce units of the other.
Notice that if they give up more capital goods for consumer goods they are hurting their future.
2. Why is the PPC concave?
As more and more of a good is produced it takes more away from the other because the resources are not easily converted. (Law of Increasing Opportunity Costs)
3. What does a point inside the curve represent?
A point in which efficiency is not being achieved.
4. Can you think of an example in history when we were inside the PPC?
Great Depression
5. What is the significance of a point outside the PPC.
Without advancements in technology or changes in factors of production this is unattainable for long period of time.
Suppose that additional resources (land, labor, capital and entrepreneurial ability was found. (In other words the economy is expanding.) HOW WOULD THIS AFFECT OUR PPC? (It would shift it outward.)
The same is true for technological advancements
One thing a society must decide is if it wants to produce more goods that will help it advance or more goods that it can consume now. Should we produce at A or B? Either works, it just depends on what society wants. However, A will help you advance quicker in the long run.
6. Under what conditions could the point outside the PPC be reached?
Technological advancements or new resources
Make sure that students understand that no point on the curve is more desirable from an economist standpoint. That gets into societies specific wants, which is outside the scope of the class.
OPPORTUNITY COSTS: THE AMOUNT OF OTHER PRODUCTS WHICH MUST BE FOREGONE OR SACRIFICED TO OBTAIN SOME AMOUNT OF ANY GIVEN PRODUCT.
Ex: In order to have more pizzas we must give up robots. The opportunity of pizzas is therefore robots.
OPPORTUNITY COST: The best alternative forgone. This takes into consideration all types of opportunity costs rather than just production costs. Ex. Study or go on a date
Implicit Costs: Resources that could have been used in the next best alternative. You could be taking team sports or marketing instead of A.P. Economics. You could take a nap tonight instead of studying.
Explicit Costs: These are the measurable costs. It costs $3 for a Big Mac. This is measurable.
Marginal means change.
Broad Social Goals
1. Economic Freedom: The right to choose your own occupation, employer, and use of your money (taxes?). Business owners have the right to produce what they want and how much they want.
2) Economic Efficiency: gains must be more than costs.
Efficiency must continually improve if we expect our standard of living to increase.
Measurement: Corporate Profits, GNP, GDP and Unemployment
3) Economic Equity: Equity means fairness
Illegal to discriminate based on age, race, sex or disability
False advertising, unfair pricing and dangerous products are prohibited.
Measurement: Unemployment, # of discrimination cases, minimum wage
4) Economic Security: protection from layoffs and illness
Measurement: Welfare Total Recipients, Social Security Expenditures, and unemployment rate
5) Full Employment:
If people can not work they can not support their family. Society is hurt.
Unemployment reduces efficiency because factors of production are not being used.
Unemployed people must rely on others for support. (Family, friend, government…)
Measurement: unemployment rate
6) Price Stability
Inflation is a rise in the general level of prices
Inflation reduces every person’s buying power
Inflation is especially difficult for people on fixed incomes (Fixed incomes are incomes that do not rise as prices rise)
Inflation Hurts Savers
Measurement: Consumer Price Index (CPI)
7) Economic Growth: the increasing of our production of goods and services
Is necessary to satisfy the needs and wants of a growing population
Do you want your children to live better than you do?
Do you want to improve the quality of home, medical care, transportation, and clothing….
To do this requires economic growth.
Measurement: GNP, Corporate Profits and Dow Jones IA
Honors World History Syllabus
Honors World History
Needle/Robinson
Ben.needle@cobbk12.org
STEVEN.ROBINSON@cobbk12.org
Course Description: Today, humans are found everywhere on Earth, in jungle and desert, in boulevard and bazaar. But how did we get there? Where did we come from? And why do we all look and act so differently? This course answers those questions by tracing the human race from its origins to modern times. Beginning with earliest human history, we will chart the course of humanity through its earliest civilizations forward on to the global community of the 21st century.
Text Book: World History: Patterns of Interaction
Make Up Work Policy: See agenda for Cobb County School District policies in place concerning student absences and make up work.
Late work: No full credit for late work (any exceptions to this rule is teacher discretion). Fifty percent of the total grade for a particular assignment is the maximum awarded for any late work. Those who habitually hand in late work will risk the chance of late work no longer being accepted.
Class Requirements: You must pass this class to graduate! Bring all required items to class everyday, unless told in advance by teacher. These items include: Textbook, Notebook paper, Writing utensil
Food/Drink: The only item allowed in class during insturcitional time is water unless otherwise specified. Lunch time is for consuming lunch.
Restroom Policy: Passes granted only in emergency cases (Teacher is final judge as to the validity/severity of an emergency). No passes during the first 10 minutes of class will be issued.
Projects: We will have multiple projects throughout the course. Some are individual and some are group efforts. Sufficient advanced notice of project requirements and deadlines will be given. Late projects will result in a deduction of one letter grade per day.
NO NAME Policy: NO NAME = 20% lost credit on assignment
Cheating Policy: Policy set forth in student handbook will be adhered to.
Grading:
Tasks/Classwork 20% Chapter Quizzes 20%
Projects 20% Tests/Exams 30%
Final Exam 10% Cheating = 0
Course Outline:
Unit 1 Beginnings of Civilization
A) Earliest Humans
B) Early River Valley Civilizations
C) Spread of Civilization
Unit 2 Age of Empires
A) The Near East
B) The Far East
C) Southern Europe
D) Africa
E) The Americas
Unit 3 The Age of Exchange and Encouter
A) Muslim World
B) Christian Europe
C) Far Eastern Empires
D) Wealth of Africa
Unit 4 When Worlds Collide
A) The Americas
B) Europe in Transition (Renaissance and Reformation)
C) Ottoman Empire
D) India
Unit 5 Absolutism to Revolution
A) Absolute Monarchs
B) Enlightenment and Revolution
Unit 6 The Industrial World
A) Industrial Revolution
B) Democracy
C) Imperialism
Unit 7 The Great War
A) World War I
B) Revolution and Nationalism
C) Postwar Uncertainty
Unit 8 World War II
A) Causes
B) Effects
Unit 9 The Modern World
A) The Cold War
B) Era of New Nations
C) Struggle for Democracy
D) Global Interdependence
------------------------------------------------------------------------------------------------------------
I have read the course syllabus and understand the rules and procedures for Honors World History.
____________________________________________
Student Signature
____________________________________________
Parent/Guardian Signature
Contact Information:
Name of Student___________________________________________
Address_______________________________________________________________
Student phone number________________________________________
Parent phone number__________________________________________
Parent email____________________________________________________
Needle/Robinson
Ben.needle@cobbk12.org
STEVEN.ROBINSON@cobbk12.org
Course Description: Today, humans are found everywhere on Earth, in jungle and desert, in boulevard and bazaar. But how did we get there? Where did we come from? And why do we all look and act so differently? This course answers those questions by tracing the human race from its origins to modern times. Beginning with earliest human history, we will chart the course of humanity through its earliest civilizations forward on to the global community of the 21st century.
Text Book: World History: Patterns of Interaction
Make Up Work Policy: See agenda for Cobb County School District policies in place concerning student absences and make up work.
Late work: No full credit for late work (any exceptions to this rule is teacher discretion). Fifty percent of the total grade for a particular assignment is the maximum awarded for any late work. Those who habitually hand in late work will risk the chance of late work no longer being accepted.
Class Requirements: You must pass this class to graduate! Bring all required items to class everyday, unless told in advance by teacher. These items include: Textbook, Notebook paper, Writing utensil
Food/Drink: The only item allowed in class during insturcitional time is water unless otherwise specified. Lunch time is for consuming lunch.
Restroom Policy: Passes granted only in emergency cases (Teacher is final judge as to the validity/severity of an emergency). No passes during the first 10 minutes of class will be issued.
Projects: We will have multiple projects throughout the course. Some are individual and some are group efforts. Sufficient advanced notice of project requirements and deadlines will be given. Late projects will result in a deduction of one letter grade per day.
NO NAME Policy: NO NAME = 20% lost credit on assignment
Cheating Policy: Policy set forth in student handbook will be adhered to.
Grading:
Tasks/Classwork 20% Chapter Quizzes 20%
Projects 20% Tests/Exams 30%
Final Exam 10% Cheating = 0
Course Outline:
Unit 1 Beginnings of Civilization
A) Earliest Humans
B) Early River Valley Civilizations
C) Spread of Civilization
Unit 2 Age of Empires
A) The Near East
B) The Far East
C) Southern Europe
D) Africa
E) The Americas
Unit 3 The Age of Exchange and Encouter
A) Muslim World
B) Christian Europe
C) Far Eastern Empires
D) Wealth of Africa
Unit 4 When Worlds Collide
A) The Americas
B) Europe in Transition (Renaissance and Reformation)
C) Ottoman Empire
D) India
Unit 5 Absolutism to Revolution
A) Absolute Monarchs
B) Enlightenment and Revolution
Unit 6 The Industrial World
A) Industrial Revolution
B) Democracy
C) Imperialism
Unit 7 The Great War
A) World War I
B) Revolution and Nationalism
C) Postwar Uncertainty
Unit 8 World War II
A) Causes
B) Effects
Unit 9 The Modern World
A) The Cold War
B) Era of New Nations
C) Struggle for Democracy
D) Global Interdependence
------------------------------------------------------------------------------------------------------------
I have read the course syllabus and understand the rules and procedures for Honors World History.
____________________________________________
Student Signature
____________________________________________
Parent/Guardian Signature
Contact Information:
Name of Student___________________________________________
Address_______________________________________________________________
Student phone number________________________________________
Parent phone number__________________________________________
Parent email____________________________________________________
Honors Economics Syllabus
Course Description: The vast majority of the world’s population participates in some form of economic activity on a daily basis. Whether bartering goods using shells or investing in world markets, economic interactions are necessary in our lives. This course is a detailed study of the six primary principles of economics: fundamental concepts, microeconomics, free enterprise, macroeconomics, governmental economic policy, and international economics. You will be expected to actively participate in the analysis of the various topics that we will address. This will be done via several techniques including but not limited to: class discussions, large and small group discussions, simulations, videos, and class projects. The emphasis of this course is getting you to think analytically about economics, an issue you will surely experience for the rest of your lives.
Materials Required: Red, Black, and Green pens, pencils, one 3 ring binder, one package of dividers, two packs of 3 x 5 notecards
Textbook: Economics: Principles in Action by Prentice Hall ($51.47)
Units of Study
Unit 1 Intro to Econ Unit 4 Macroeconomics
Unit 2 Microeconomics Unit 5 Government and the Economy
Unit 3 Free Enterprise Unit Unit 6 International Economics
Grade Percentages:
Tests 35%
Daily Assignments/Quizzes/Vocabulary 30%
Projects 15%
Participation 5%
EOCT 15%
EXPECTATIONS
1. Be on time for class. Class will start when the bell rings. Tardy policy in Student Handbook will be followed strictly. Additionally, class ends when the teacher has decided so.
2. Come Prepared to class with your textbook, notebook, and pen/pencils. I am not responsible for supplying you with these items.
3. Participate in class discussion and activities.
4. COMPLETE all assignments. There is a strong correlation between students with borderline grades and those who have not completed assignments. No matter how big or small the assignment, DO IT!
5. SCHOOL POLICY will be STRICTLY FOLLOWED concerning dress code and hats in the classroom
6. SCHOOL POLICY will be STRICTLY FOLLOWED concerning the use of headphones and electronic devices.
7. Only WATER will be allowed in class unless otherwise indicated by teachers.
8. RESPECT others and their property. After all, you want to be treated well too.
9. YOU are responsible for completing your work with the exception of some major projects, ALL HOMEWORK AND DAILY WORK IS DUE ON TIME. Late work will be accepted one day late for half credit. Late Projects grades will decrease by one letter grade for every day late. If you know that you will be absent from school for any reason, have someone bring your project to school.
10. MAKE-UP WORK – IT’SYOUR RESPONSIBLILTY to schedule the day and time to make up any missed assignments when excused a timely fashion. Make-ups are generally offered on Tuesdays.
11. WORK HARD!!! DON’T HARDLY WORK!!
ACADEMIC INTEGRITY
Cheating is considered a serious matter. The parents of a student who has been involved in cheating will be notified and the student will receive a grade of zero for the test or evaluation period, and a grade of U in conduct.
For this course, cheating is defined as, but is not limited to, the following acts:
§ Copying anyone’s answers to questions, exercises, study guides, classwork or homework assignments
§ Taking any information verbatim from any source, including the Internet, without giving proper credit to the author, or rearranging the order of words and/or changing some words as written by the author and claiming the work as his or her own, i.e., plagiarism.
§ Looking onto another student’s paper during a test or quiz.
§ Having available any study notes or other test aids during a test or quiz without the teacher's permission.
§ Collaborating on assignments when independent work is expected.
§ Students displaying cell phones during tests and/or quizzes will have their cell phones confiscated, and will be given a zero for that test or quiz.
Confirmation
YOUR SIGNATURE BELOW INDICATES YOUR
AGREEMENT WITH THE FOLLOWING:
§ I have read and understand the academic integrity policy.
§ I have reviewed the class syllabus and understand the grading policy.
§ I give permission for my child to view G, PG or PG13 movies if they are related to the curriculum of the class.
§ I give permission for my child to read the class parallel readings noted in the syllabus.
§ I am willing to be contacted by email.
§ I have access to the internet and will access the Pinnacle parent feature (once it is available) to check on my child's progress. I understand that teachers will make every effort to post grades within 2 weeks of accepting the assignment, but that posting of grades for larger papers and projects may extend beyond the 2 week timeframe.
Student Signature ________________________________________ Date:_________
Parent/Guardian Signature _____________________________ Date:_________
Contact Information:
Name of Student____________________________________________________________
Parent Telephone Number_____________________ (H)________________________(W)
Parent Email ___________________________________________________________
Materials Required: Red, Black, and Green pens, pencils, one 3 ring binder, one package of dividers, two packs of 3 x 5 notecards
Textbook: Economics: Principles in Action by Prentice Hall ($51.47)
Units of Study
Unit 1 Intro to Econ Unit 4 Macroeconomics
Unit 2 Microeconomics Unit 5 Government and the Economy
Unit 3 Free Enterprise Unit Unit 6 International Economics
Grade Percentages:
Tests 35%
Daily Assignments/Quizzes/Vocabulary 30%
Projects 15%
Participation 5%
EOCT 15%
EXPECTATIONS
1. Be on time for class. Class will start when the bell rings. Tardy policy in Student Handbook will be followed strictly. Additionally, class ends when the teacher has decided so.
2. Come Prepared to class with your textbook, notebook, and pen/pencils. I am not responsible for supplying you with these items.
3. Participate in class discussion and activities.
4. COMPLETE all assignments. There is a strong correlation between students with borderline grades and those who have not completed assignments. No matter how big or small the assignment, DO IT!
5. SCHOOL POLICY will be STRICTLY FOLLOWED concerning dress code and hats in the classroom
6. SCHOOL POLICY will be STRICTLY FOLLOWED concerning the use of headphones and electronic devices.
7. Only WATER will be allowed in class unless otherwise indicated by teachers.
8. RESPECT others and their property. After all, you want to be treated well too.
9. YOU are responsible for completing your work with the exception of some major projects, ALL HOMEWORK AND DAILY WORK IS DUE ON TIME. Late work will be accepted one day late for half credit. Late Projects grades will decrease by one letter grade for every day late. If you know that you will be absent from school for any reason, have someone bring your project to school.
10. MAKE-UP WORK – IT’SYOUR RESPONSIBLILTY to schedule the day and time to make up any missed assignments when excused a timely fashion. Make-ups are generally offered on Tuesdays.
11. WORK HARD!!! DON’T HARDLY WORK!!
ACADEMIC INTEGRITY
Cheating is considered a serious matter. The parents of a student who has been involved in cheating will be notified and the student will receive a grade of zero for the test or evaluation period, and a grade of U in conduct.
For this course, cheating is defined as, but is not limited to, the following acts:
§ Copying anyone’s answers to questions, exercises, study guides, classwork or homework assignments
§ Taking any information verbatim from any source, including the Internet, without giving proper credit to the author, or rearranging the order of words and/or changing some words as written by the author and claiming the work as his or her own, i.e., plagiarism.
§ Looking onto another student’s paper during a test or quiz.
§ Having available any study notes or other test aids during a test or quiz without the teacher's permission.
§ Collaborating on assignments when independent work is expected.
§ Students displaying cell phones during tests and/or quizzes will have their cell phones confiscated, and will be given a zero for that test or quiz.
Confirmation
YOUR SIGNATURE BELOW INDICATES YOUR
AGREEMENT WITH THE FOLLOWING:
§ I have read and understand the academic integrity policy.
§ I have reviewed the class syllabus and understand the grading policy.
§ I give permission for my child to view G, PG or PG13 movies if they are related to the curriculum of the class.
§ I give permission for my child to read the class parallel readings noted in the syllabus.
§ I am willing to be contacted by email.
§ I have access to the internet and will access the Pinnacle parent feature (once it is available) to check on my child's progress. I understand that teachers will make every effort to post grades within 2 weeks of accepting the assignment, but that posting of grades for larger papers and projects may extend beyond the 2 week timeframe.
Student Signature ________________________________________ Date:_________
Parent/Guardian Signature _____________________________ Date:_________
Contact Information:
Name of Student____________________________________________________________
Parent Telephone Number_____________________ (H)________________________(W)
Parent Email ___________________________________________________________
AP Macro Syllabus
Syllabus
A.P. Macroeconomics
The purpose of an Advanced Placement course in macroeconomics is to give students a thorough understanding of the principles of economics that apply to national income and price determination, economic performance measures, economic growth, and international economics.
Materials:
In order to be fully prepared, students are expected to have their notebooks (one with pockets to hold handouts), and pens or pencils in class everyday. You will be advised ahead of time if you need any additional materials.
Grading Procedures:
Students will be assessed in a variety of ways. This may include but not be limited to homework, worksheets, quizzes, tests, daily work, projects (both individual and group), and a final exam. The break down of these grades will be as follows:
Tests: 40%.
Daily Activities: 40%
Projects: 5%
State Mandated End of Course Test 15%
At the beginning of each six weeks each student will be given 25 daily points. Up to five times each six weeks I will spot check assignments to see if students have completed their homework. If your assignment is not completely finished (and shows that thought was put into it) then you will lose five of those 25 points. In addition, throughout the semester I will take assignments to grade.
At the end of the semester the students will have ten points added on to their class average. The reason for this is that since this is an AP class, the majority of students will find that their grades are around ten points lower than they would receive in an academic class. (These ten points will not be reflected in the progress reports.)
Students and parents must understand up front that this is a college level class. As such, students will be expected to spend a great deal more time on this class than they would in an ordinary class. The very nature of economics makes it almost like a foreign language—with its own vernacular and vocabulary. It is very important for the student to work on economics daily or they will ultimately get behind and not be able to catch up.
SUMMARY OUTLINE: AP MACROECONOMICS COURSE AND EXAMINATION
Content Area % goals of examination
I. Basic economic concepts 8-12%
A. Scarcity, choice and opportunity costs
B. Production possibilities curve
C. Comparative advantage, absolute advantage, specialization and exchange
D. Demand, supply, market equilibrium
E. Macroeconomic issues, business cycle, unemployment, inflation and growth
II. Measurement of economic performance 12-16%
A. National income accounts (4-6%)
1. Circular flow
2. Gross Domestic Product
3. Components of Gross Domestic Product
4. Real versus nominal Gross Domestic Product
B. Inflation measurement and adjustment (4-5%)
1. Price indices
2. Nominal and real values
3. Costs of inflation
C. Unemployment (4-5%)
1. Definition and measurement
2. Types of unemployment
3. Natural rate of unemployment
III. National income and price determination 10-15%
A. Aggregate demand (5-8%)
1. Determinants of aggregate demand
2. Multiplier and crowding-out- effects
B. Aggregate supply (5-8%)
1. Short-run and long run analyses
2. Sticky versus flexible wages and prices
3. Determinants of aggregate supply
C. Macroeconomic equilibrium (5-8%)
1. Real output and price level
2. Short and long run
3. Actual versus full-employment output
4. Economic fluctuations
IV. Financial Sector 15-20%
A. Money, Banking, and financial markets (7-15%)
1. Definition of financial assets: money, stocks, bonds
2. Time value of money
3. Measure of money supply
4. Banks creation of money
5. Money demand
6. Money market
7. Loanable funds market
B. Central bank and control of the money supply (3-5%)
1. Tools of central bank policy
2. Quantity theory of money
3. Real versus nominal interest rates
V. Inflation, Unemployment, and Stabilization Policies (20-30%)
A. Fiscal and monetary policies (15-20%)
1. Demand-side effects
2. Supply-side effects
3. Policy mix
4. Government deficits and debt
B. Inflation and unemployment (5-10%)
1. Types of inflation
a. Demand-pull inflation
b. Cost push inflation
2. The Phillips curve: short run versus long run
3. Role of expectations
VI. Economic Growth and Productivity (5-10%)
A. Investment in human capital
B. Investment in physical capital
C. Research and development, and technological progress
D. Growth policy
VII. Open Economy: International Trade and Finance (10-15%)
A. Balance of payments accounts
1. Balance of trade
2. Current account
3. Capital account
B. Foreign exchange market
1. Demand for and supply of foreign exchange
2. Exchange rate determination
3. Currency appreciation and depreciation
C. Net exports and capital flows
D. Links to financial and goods markets
Note: The percentages approximate the weight on the AP exam. These change from year to year so I will be making adjustments as needed. I reserve the right to make adjustments in course content and/or grading procedures as needed.
Copyright College Entrance Examination Board and Educational Testing Services
CLASSROOM RULES AND PROCEDURES
School Policies/General Information:
- All school policies will apply in the classroom. This includes the policy on food, drink, candy and gum in the classroom.
Class Preparation:
- Students are expected to be in the room when the bell rings. Failure to abide by this will result in the student being counted as tardy. In keeping with school policies every three unexcused tardiest counts as an absence. In addition, after the third tardy seniors will lose their exam exemption privilege. For both the third and fourth tardies students must serve a ten-minute detention in my room before school. Further tardies will result in administrative referrals.
Classroom Behavior:
- This class is conducted like a college level classroom. You are expected to participate in all activities.
- Unless it is an extreme emergency no bathroom passes will be issued.
Homework:
- Homework will be a part of this class. Homework, reports and projects will be accepted late at a penalty of 25% per day. If you have an excused absence, pre assigned work is due the day you return.
Grading:
- Students with excused absences will have five class days to makeup homework, tests or exams. Failure to makeup a test within five days will result in a zero. Makeup work is your responsibility.
High school students tend to study independently while college students tend to study in groups. This is a college level class. Study in groups!!!. However, honesty is expected on all work. Only your work will be accepted. Copying other people’s homework is not studying together and is considered cheating and will be dealt with accordingly.
________________________________________________________________
I have read the class outline and Rules for Mr. Robinson's A.P. Economics class:
Student Signature _____________________________ Date ____________
Parent Signature _____________________________ Date ____________
A.P. Macroeconomics
The purpose of an Advanced Placement course in macroeconomics is to give students a thorough understanding of the principles of economics that apply to national income and price determination, economic performance measures, economic growth, and international economics.
Materials:
In order to be fully prepared, students are expected to have their notebooks (one with pockets to hold handouts), and pens or pencils in class everyday. You will be advised ahead of time if you need any additional materials.
Grading Procedures:
Students will be assessed in a variety of ways. This may include but not be limited to homework, worksheets, quizzes, tests, daily work, projects (both individual and group), and a final exam. The break down of these grades will be as follows:
Tests: 40%.
Daily Activities: 40%
Projects: 5%
State Mandated End of Course Test 15%
At the beginning of each six weeks each student will be given 25 daily points. Up to five times each six weeks I will spot check assignments to see if students have completed their homework. If your assignment is not completely finished (and shows that thought was put into it) then you will lose five of those 25 points. In addition, throughout the semester I will take assignments to grade.
At the end of the semester the students will have ten points added on to their class average. The reason for this is that since this is an AP class, the majority of students will find that their grades are around ten points lower than they would receive in an academic class. (These ten points will not be reflected in the progress reports.)
Students and parents must understand up front that this is a college level class. As such, students will be expected to spend a great deal more time on this class than they would in an ordinary class. The very nature of economics makes it almost like a foreign language—with its own vernacular and vocabulary. It is very important for the student to work on economics daily or they will ultimately get behind and not be able to catch up.
SUMMARY OUTLINE: AP MACROECONOMICS COURSE AND EXAMINATION
Content Area % goals of examination
I. Basic economic concepts 8-12%
A. Scarcity, choice and opportunity costs
B. Production possibilities curve
C. Comparative advantage, absolute advantage, specialization and exchange
D. Demand, supply, market equilibrium
E. Macroeconomic issues, business cycle, unemployment, inflation and growth
II. Measurement of economic performance 12-16%
A. National income accounts (4-6%)
1. Circular flow
2. Gross Domestic Product
3. Components of Gross Domestic Product
4. Real versus nominal Gross Domestic Product
B. Inflation measurement and adjustment (4-5%)
1. Price indices
2. Nominal and real values
3. Costs of inflation
C. Unemployment (4-5%)
1. Definition and measurement
2. Types of unemployment
3. Natural rate of unemployment
III. National income and price determination 10-15%
A. Aggregate demand (5-8%)
1. Determinants of aggregate demand
2. Multiplier and crowding-out- effects
B. Aggregate supply (5-8%)
1. Short-run and long run analyses
2. Sticky versus flexible wages and prices
3. Determinants of aggregate supply
C. Macroeconomic equilibrium (5-8%)
1. Real output and price level
2. Short and long run
3. Actual versus full-employment output
4. Economic fluctuations
IV. Financial Sector 15-20%
A. Money, Banking, and financial markets (7-15%)
1. Definition of financial assets: money, stocks, bonds
2. Time value of money
3. Measure of money supply
4. Banks creation of money
5. Money demand
6. Money market
7. Loanable funds market
B. Central bank and control of the money supply (3-5%)
1. Tools of central bank policy
2. Quantity theory of money
3. Real versus nominal interest rates
V. Inflation, Unemployment, and Stabilization Policies (20-30%)
A. Fiscal and monetary policies (15-20%)
1. Demand-side effects
2. Supply-side effects
3. Policy mix
4. Government deficits and debt
B. Inflation and unemployment (5-10%)
1. Types of inflation
a. Demand-pull inflation
b. Cost push inflation
2. The Phillips curve: short run versus long run
3. Role of expectations
VI. Economic Growth and Productivity (5-10%)
A. Investment in human capital
B. Investment in physical capital
C. Research and development, and technological progress
D. Growth policy
VII. Open Economy: International Trade and Finance (10-15%)
A. Balance of payments accounts
1. Balance of trade
2. Current account
3. Capital account
B. Foreign exchange market
1. Demand for and supply of foreign exchange
2. Exchange rate determination
3. Currency appreciation and depreciation
C. Net exports and capital flows
D. Links to financial and goods markets
Note: The percentages approximate the weight on the AP exam. These change from year to year so I will be making adjustments as needed. I reserve the right to make adjustments in course content and/or grading procedures as needed.
Copyright College Entrance Examination Board and Educational Testing Services
CLASSROOM RULES AND PROCEDURES
School Policies/General Information:
- All school policies will apply in the classroom. This includes the policy on food, drink, candy and gum in the classroom.
Class Preparation:
- Students are expected to be in the room when the bell rings. Failure to abide by this will result in the student being counted as tardy. In keeping with school policies every three unexcused tardiest counts as an absence. In addition, after the third tardy seniors will lose their exam exemption privilege. For both the third and fourth tardies students must serve a ten-minute detention in my room before school. Further tardies will result in administrative referrals.
Classroom Behavior:
- This class is conducted like a college level classroom. You are expected to participate in all activities.
- Unless it is an extreme emergency no bathroom passes will be issued.
Homework:
- Homework will be a part of this class. Homework, reports and projects will be accepted late at a penalty of 25% per day. If you have an excused absence, pre assigned work is due the day you return.
Grading:
- Students with excused absences will have five class days to makeup homework, tests or exams. Failure to makeup a test within five days will result in a zero. Makeup work is your responsibility.
High school students tend to study independently while college students tend to study in groups. This is a college level class. Study in groups!!!. However, honesty is expected on all work. Only your work will be accepted. Copying other people’s homework is not studying together and is considered cheating and will be dealt with accordingly.
________________________________________________________________
I have read the class outline and Rules for Mr. Robinson's A.P. Economics class:
Student Signature _____________________________ Date ____________
Parent Signature _____________________________ Date ____________
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