#microeconomicsclass

[cmcecons2015-blog]

Ch. 13 Micro Reflection

1. As inputs increase, the marginal cost may decrease because of specialization or better utilization of inputs leading to greater proportional outputs. The text gives examples mainly of labor.  Marginal cost may decrease because production tasks are better spread through the labor force in a more efficient manner.

2. A firm must weigh the investment in increasing marginal costs against its goal of maximizing profit and minimizing costs. A rational firm will not allow increasing marginal costs to negatively affect its profits.

3. I know that in my own work there are marginal costs to performing tasks. For instance, there is probably a sweet spot of the number of economics chapters that I can effectively get through in a given time frame. There comes a point when the marginal cost of completing the chapter’s work increases as the numbers blur together and the terms become meaningless symbols, which will affect the profit that I seek: a good grade. This is probably a decent example of diseconomy of scale. 

[cmcecons2015-blog]

Ch. 5 Micro Reflection

1. The most notable sales practice based on elasticity that I can think of is the way that live sports are packaged in television products. Live sports are the only TV program to maintain some inelastic demand: one has a vested interest in seeing the actual broadcast and streaming options are limited.  Television providers can charge a premium for that content and package it with other channels that one may or may not want. This sales practices seems to be working pretty well, but will probably lose its effectiveness as technology makes more convenient substitute products easier to access.

2. I didn’t realize it until the aplia homework, but I struggled with graphs of the long term v. short term changes in elasticity.  I understand the theory, but it took me a while to wrap my head around the graphic representation. I also kept flipping Q and P in my equations, but I think I got that one figured out.  It all seems pretty intuitive, but I start to second-guess myself when faced with some of the very abstract questions. Unit elasticity is a concept that seemed very simple, but the examples in the problem sets threw me.

[cmcecons2015-blog]

Ch. 4 Micro Reflection

1. One would expect Uber or Lyft entering a market to reduce the demand for taxi medallions.  Those services serve as substitutes for taxis, so the demand curve would shift to the left for taxi medallions.

2. I lived in the DC metro area during the notorious cupcake boom.  Within a year or two there were boutique cupcake shops opening up in all of the desirable neighborhoods.  In early days those shops could charge an immense amount for one of their treats as people flooded in to be part of the new fad. Shops opened at about the same rate as people getting tired of expensive cupcakes, so the supply surged while demand plummeted.  A lot of those shops either closed or changed to selling doughnuts, which I think was the next confection fad to sweep our nation’s capitol.

3. I live in a town that, according to the most recent census, houses 485 people. As of last month, it is also home to two movie theaters.  They are across the street from one another. With the new establishment came a surge of interest in going to the movies among residents in town. In a perfect market, one would expect the the quantity of movies available to increase, with the movement of the price unknown to me but ultimately based on how much demand increased along with supply.

[cmcecons2015-blog]

Micro Ch. 3 Reflection

1. I am still glad to now know the difference between comparative and absolute advantage. I have seen and been using the term comparative advantage for years, but only today put the numbers behind it.

2. It is someone’s favorite soundbite that global capitalism is responsible for bringing more individuals out of poverty than any other force in the history of the planet. In that spirit, I will say that international trade is a net positive, though there is a world of room for improvement. 

3. My opinion of trade remains the same.  It is nice to have the beginning of a numerical understanding of how trade operates, however. In that light my opinion has not changed, but has become more well-informed.

4. I believe that my example for Macro was ammunition.  It is not the choice that I would like to make, but I honestly cannot think of another item that I have bought recently that was produced internationally.  This may be a sign that I should buy more clothes or devices. I would not buy locally for increased utility, but as an investment in the local economy. It is an activity that is more community-oriented than based on economic expedience. That said, I will almost always go with a more economical internationally-made tchotchke than a local artisanal tchotchke so as to get more product for my dollar. The trade-off of feeling good v. having budget flexibility can be a tough sell.

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Micro Ch. 2 Reflection

1. Simplified models help us understand complex economic ideas without getting bogged down in detail. They allow an understanding of main economic drivers that is thorough enough to convey real economic activity, but not so detailed that it is incomprehensible.

2. A normative statement about the economy is that households should buy more locally produced products.  The important distinction between this and a positive comment is that this is a statement of opinion about action rather than a statement of empirically supported observation. It may be supported by that information, but then again it may not be.

[cmcecons2015-blog]

Micro Reflection 1

1.Honest confession: I have a BA in Political Science and spent most of my undergraduate days between leering glances with economics students. It also means that I got the economics lite treatment, so a lot of these concepts are pretty familiar. I am interested to see how the text approaches inflation, especially based on the 10th principle that ties inflation to unemployment. It seems like an interesting topic with plenty of case studies around the world in recent years.

2. I suppose that I got into new questions a little in section 1.  I am interested in finding out more about the relationship between inflation and unemployment. As a public-sector oriented guy, I am also curious to see how the text continues to address state involvement in economic policy.