Economics+T2

Aaron Cole Alyssa JakeD Nash Worth Bailey Lucas Nasera Shannon Claire Fitz Maggie Ricky Jack Zach Hannah //Freakonomics//

__**Supply**__ providing a product or service

__**Demand**__ is a need or want

__**//Supply & Demand//**__ //In class we discussed what happened with our skittles activity.//

//People has seen the available skittles and were already discussing prices and preferences (Demand)// //Prices went up based on what you thought was available(supply)// //Prices also went up because you thought they might run out (supply)// //Excitement and competition pushed up the price (Demand)// //Rarity and scarcity (Supply) also impacted the price// //Prices were based on previous bids (combination of supply & demand)// //You also spent money because it was all you had left (Demand)// //Second time sale prices were far lower for two reasons, You had some already (demand dropped) and you realised more were available (Supply increased)//

__**//Introductory// //prices//**__

//Why are these prices higher? More demand and limited supply.// //Why does it cost more for an initial production run? All the fixed costs are the same but the production is "shorter" till the product sells millions.// //These costs are call **start up costs.**//

__//**Economies of Scale**//__

//Think of the school and lawn company. The costs only change a little when you have a class of 5 vs a class of 15. When you make the most of your start up costs and you are running at or close to **Full Capacity**, life is good. What if you get too many students or too many lawns to cut? **Over Capacity**//

__**Companies go in ****to **** business to make ****a **** profit **__Things to consider.....


 * Costs?
 * What will people pay?
 * How much demand is there?
 * Range for ladies perfume- $50-$124
 * Men’s perfume: $50-$80
 * Ladies’ perfumes cost more women are prepared to pay more
 * Women also usually buy more perfume
 * Universal truth: Most men are idiots.
 * Women are willing to pay more
 * There are points at which people are no longer willing to buy stuff
 * <span style="font-family: Cambria,serif; font-size: 10pt;">Economics is ruled by the principle of supply and demand
 * <span style="font-family: Cambria,serif; font-size: 10pt;">As supply goes up demand goes down
 * <span style="font-family: Cambria,serif; font-size: 10pt;">Look at the competition
 * <span style="font-family: Cambria,serif; font-size: 10pt;">Is anyone else making it?
 * <span style="font-family: Cambria,serif; font-size: 10pt;">What are they selling it for?
 * <span style="font-family: Cambria,serif; font-size: 10pt;">How successful are they
 * <span style="font-family: Cambria,serif; font-size: 10pt;">Any information we can get

__**Promotions**__ <span style="font-family: Verdana,sans-serif; font-size: 10pt;">Buy 1 Get 1 Free, super size, 50% off the next item.... · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> People come to save & buy more · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Buy other expensive things · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Buy what you don’t need o <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Ex: Shoes · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Get rid of old stock · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Get people to try something · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Limited quantity get people in the store · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Economies of Scale o <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> But 1 Pair/Half off Next

· <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Complete control · <span style="font-family: Verdana,sans-serif; font-size: 10pt;"> Supply- Not very good money or service ** __<span style="font-family: Verdana,sans-serif; font-size: 10pt;">Dominance __ ** They control for positive reasons like being the best.
 * __<span style="font-family: Verdana,sans-serif; font-size: 10pt;">Monopoly __ **

__**Ethical**__ Practice - right, honest, fair

False advertising price matching/beating Ripping off (Charging for something that doesn't need to be done) Stealing __i__deas Insider Information (trading) Substituting material/product for an inferior choice unfair/unequal discounts Ponzi schemes Hidden fees
 * __Unethical__** examples of "unethical" business practices are;

You said that most companies that have long contracts are "unethical" they try to attract you with a deal but they will make money off you in the end. Mobile operators, Cable networks, Fast food companies, IT companies

__**Outsourcing**__ - Someone else, in a different place (state) can make what I make here much cheaper - Tax is lower - Labor is cheaper *Food, water, housing, land, gas, electricity, etc. - Laws are different

__**Problems of Foreign Production**__ Remember as we produce more things cost less, so as things become cheaper people often buy more (so they make more) __**Pollution**__ (So the more you make...)
 * Takes away jobs of Americans (profit, cheap)
 * Child labor
 * Danger
 * Conditions
 * Wages
 * Hours
 * Laws are different
 * <span style="font-family: 'Times New Roman',serif; font-size: 12pt;">The more you produce the more air pollution the factories make
 * <span style="font-family: 'Times New Roman',serif; font-size: 12pt;">Power stations also pollute more as they burn Cole or oil to make electricity
 * <span style="font-family: 'Times New Roman',serif; font-size: 12pt;">Pollution from packaging
 * <span style="font-family: 'Times New Roman',serif; font-size: 12pt;">water pollution from cleaning and chemicals
 * <span style="font-family: 'Times New Roman',serif; font-size: 12pt;">Raw material depletion

__**<span style="font-family: 'Times New Roman',serif; font-size: 12pt;">Money **__ <span style="font-family: Times New Roman,serif;">How did money come to be? Why was it necessary ? To facilitate trade and to avoid conflicts in the barter system.

__**<span style="font-family: Times New Roman,serif;">Banking **__ <span style="font-family: Times New Roman,serif;">If you go to a bank for a loan what are the kind of things they are likely to want to know or ask?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">What job do you have?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">Who do you work for?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">What your marital status is?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">How much do you earn?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">What other debt do you have?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">What are your expenses?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">What do you want the loan for?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">How old are you?
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">Have you borrowed money before? (Credit score)
 * <span style="font-family: 'Times New Roman',serif; font-size: medium;">Basically it wants to minimize its' **<span style="font-family: 'Times New Roman',serif; font-size: medium;"> RISK **

Why was gold used as common currency? Because of its intrinsic value.

What was the Gold standard?

Where did paper money come from


 * __How do Banks make money?__**
 * Interest charged
 * Cashing checks
 * Interest earned (investments)
 * Cash withdrawal (ATM)
 * Wire transfers Money gram
 * Saftey deposit box
 * writing checks
 * FOREX


 * Economic Models**

Below is a comparison of some aspects in various Economic Models


 * || Salary / Profits || Job Choices || Job Performance || Equality in workplace || Benefits ||
 * Capitalism || Boss / owner & employees & shareholders || Yes || Individually rewarded || no || Depends on employment ||
 * Communism || Government (for all) || Assigned by skill or ability || Questionable (no incentive) || yes || Equal to all ||
 * Socialism || Shared by everybody || Yes (need based) || Don't let the team down || pretty much || Equal to all ||
 * Free Market || Individual or owner || Up to you (necessity) || No work no pay || no || Depends on you or employer ||