Post Lesson 8/Pre Lesson 9

I really enjoyed class yesterday it was a lot of fun. I'd like to know what you all thought of it. I gave you all a check thought you all did seem to struggle through how to model the information you had been given. I was happy to see you all disagree with the idea that we should hold prices down after a disaster but I worry that perhaps that was either due to group think or merely because you think that's what I wanted to hear....

Points to take way:

• Prices send signals, when we mess with prices we mess with those signals.
• Prices adjust in order to move the market and they change for a variety of reasons either
• Supply changes: some underlying cause moves the whole function of supply which makes producers desire to produce more or less at all prices. The way to tell if you are thinking about this properly is to ask yourself the question: "If prices stayed the same would I produce more/less of the product?"
• the answer is yes if, for example, it gets cheaper/more expensive to produce something
• if you find your self saying "because prices changed supply changes" just stop. it is correct that a producer will make less but that is just the law of supply (movement along the curve) not a change in supply (a change of the curve itself)
• Demand Changes: some underlying cause moves the whole function of demand which makes buyers desire to buy more or less at all prices. The way to tell if you are thinking about this properly is to ask yourself the question: "If prices stayed the same would I buy more/less of the product?"
• the answer is yes if, for example, an alternative good gets cheaper/more expensive
• if you find your self saying "because prices changed demand changes" just stop. it is correct that a buyer will buy more/less but that is just the law of demand(movement along the curve) not a change in demand (a change of the curve itself)
• External legislation: prices may change when/if the government legislates minimum/maximum prices
• A shortage or surplus can signal that prices aren't where they ought to be and can tell a supplier that they need to produce more/less and raise/lower prices to cover their marginal cost of producing the next unit. This is like the SUBARU example. Increased prices can actually be good because they encourage suppliers to provide more of the product you desire.
• If the above is true it should be true for any situation. Messing with prices (lowering them) is not the right way to get goods (that are perhaps desperately needed) to the area that needs them. Despite the rightful desire to care for the poor, failing to encourage business by denying them the incentives (higher prices) to move products to their best use (area after hurricane) will only lead to further shortages and other issues.
• Even when price controls don't seem to effect total surplus (concert ticket examples) the surplus will depend on how we allocate the resource. What if we use lines? what if we use lotteries? do either have additional costs that wouldn't be incurred if we allowed prices to increase? Do these different systems of allocation potentially result in different people getting the tickets?

For next time bring your quiz from before and read BE 20, 30-38, and 118-125. In your journal, respond to this statement: "We ought to cap the amount of profits any company can earn. Beyond X billions per quarter we should claim that amount and distribute the money to small struggling businesses or people."

Post Lesson 7/Pre Lesson 8

Today's lesson was ok, you all really bordered on a check minus for today but i'm giving you a check out of courtesy. Please talk to each other during exercises especially and bounce ideas off one another. Actually we had two tables talking about it and that pushed me to a check for today. My major takeaways:

• Prices coordinate knowledge so when we mess with prices we stop the neccesary flow of information. This has an effect on allocation (or the failure to allocate) resources to their most efficient uses.
• Looks can be deceiving, it may not appear that efficiency is affected by price controls (self-imposed or otherwise) but it still may be.
• Non-monetary costs can be just as important as the monetary costs.
• Scarcity and Shortage/Surplus are two completely different things
• YOU need to think....given some facts you need to interpret what they mean on a graph and how the basic principles apply. What does the supply curve tell you? the demand curve? aren't they just X's? what does it mean if they look different than you expected? what does it mean for a consumer to have surplus? for a producer to have surplus?

For next time

1. Complete the take home quiz
2. Complete your first reflection paper with the following peices stapled together in this order
1. the grading rubric found here: \\AFAEDUFS10\cadet-data\DF\DFEG\Economics\Econ201\Fall 2013\Balser
2. your initial submission
3. your final reflection paper (you might care to note how the block or feedback from the first paper made you reconsider or modify your views on the question)
3. additionally read pg 24-30 and 112-117 in Basic Economics

Post Lesson 6/Pre Lesson 7

Today we discussed shifts and focused on opportunity cost and alternatives. Please complete the reading for Lesson 8:

SUP 25-31, BE 49-52 and one section from BE 52-58. For your journal answer the following question:

How does rent control affect the quality of housing, the average age of housing, and the number of people per apartment?

I gave today's lesson a check. Remember those fundamental questions and that changing Demand or Supply means changing the whole function (desiring more or less quantity at every price) and not just a change in price.

Post Lesson 5/Pre Lesson 6

First things first,

HW for next time, answers from this time, and Reflection paper rubric are found here: \\AFAEDUFS10\cadet-data\DF\DFEG\Economics\Econ201\Fall 2013\Balser

Today in class we talked about Marginal Value and Demand, Marginal Cost and Supply, the relationship between each of them and price, consumer and producer surplus (or profit), and we began to talk about what things might shift supply and demand. In particular:

• Marginal Value/Marginal Cost have the root question of How many do I have/have I produced? that is these two are a function of quantity that tells us a price we are willing to pay/receive to obtain/make the next unit
• Demand/Supply share the root question How much will it cost/can I get paid for it? that is demand/supply are a funciton of price that tells us how many we will buy/sell at any price
• Graphically MV=D and MC=S
• When prices get screwy we end up with "lost transactions" which result in less total surplus for the whole economy.
• For supply or demand to change (and not just move along the curve) something has to happen which makes us want to buy (or sell) more of that product at every price.
• As an example for demand we talked about the effect of an increase in income. At any price for snickers, if i have more income i'm going to buy more snickers shifting demand to the right.
• For supply we used the example of a new technology. If the new technology makes it cheaper to produce a good then for any price I get paid I can make more of that good.

I would say todays class was a check minus. It was much harder to pull information out of you all today or to get you to interact especially when it came supply and demand time.

Reflection Papers

For the most part I have the same initial comments on almost all papers. Please read the rubric....i know they can be vague but i think this may help. I am always free for questions!

If you did gas prices:

1. Most of you should have a better idea after we cover Supply and Demand the next couple lessons because it should give a model to explain what you are intuitively thinking
2. I'm interested in how the price change would affect YOU...not the world
3. Why might gas prices have changed in the first place? Could they have changed for multiple reasons? would those different types of changes have different effects?
4. When the price changes how does it affect the 7 principles especially incentives, cost-benefit, equilibrium, and efficiency? What are the primary and secondary effects that relate to YOU and might those effects have both costs and benefits.

If you did the teacher:

1. Do not focus on describing the problem as YOU see it. Also, do not describe or discuss teachers who don't seem to care...we are presuming that teachers care.
2. What are the incentives to a teacher? to a student? how might these affect the classroom?
3. Surely, many teachers know HW and other graded events can be painful and even fail to truly measure learning... why dont they change them?
4. How does a teacher know if they are actually acheiving learning in the classroom.

Overall these are much better than anticipated. I know you all are finding your way and that this paper guidance may have been vague...that's part of the point to allow you room to be creative, to think, and to apply what we are discussing.

Post Lesson 4/Pre Lesson 5

Folks the mandatory reading for lesson 5 is Hidden Order pgs 41-48 (up to Economics and time) & 54-60. The optional reading is the Supplement (found here: \\AFAEDUFS10\cadet-data\DF\DFEG\Economics\Econ201\Fall 2013\Balser) pg 1 and 11-25. In lieu of the traditional journal questions your questions for next time are:

1. Explain the definition of marginal value in your own words. An example may be helpful.

2. How is marginal value different than demand? How is it identical? (or Marginal cost different from supply)


3. How is marginal value different than price? When is it the same? (or marginal cost different from price)

4. Explain the definition of consumer and produce surplus in your own words. An example may be helpful.

5. David Friedman states “water is far more useful than diamonds, and far cheaper.” Why?

You may discuss with others, but your response should be unique to you. Please remember to document your work.

Today we laid out the framework for our model...remember models simplify things so that we can draw conclusions. In particular when incentives (or prices) change what effect will that have directly and indirectly on lots of different markets? you all worked some of this out in the corn example and seemed to understand that prices were conveying information about costs, benefits, scarcity, incentives and the effect that changes have on equilibrium and efficiency or how we allocate those scarce resources with alternative uses when things change.

We also talked about opportunity costs...remember it is the next best alternative and costs aren't just about money. Also think about what happens to opportunity cost as you spend more time doing something...if i watch one movie what is the cost? if i watch a second was the cost more or less? why?

Post Lesson 3/Pre lesson 4

Today we focused on:
- Our problem: we have a scarcity of knowledge. Knowledge is often kept in small pieces
- Prices solve this knowledge problem by conveying the knowledge we need to know. Prices convey what things are "worth" relative to other things we could have
- Competition is important for prices to "work" in the way we desire
- Even one small price change can have dramatic effects on all sorts of other goods both directly and indirectly
- Supply and Demand both need to be considered and can help us understand some of the effects that may occur

In particular think about the question of prices in low-income neighborhoods. When you all only considered the "buyers" you failed to consider the incentives and costs for sellers...this means that you left out more than half the story. Where else might you fail to consider alternative viewpoints?\


Instructions for next time:

• Your Information Sheet is FOR YOUR EYES ONLY
• You have two scenarios (sessions). We will play each out. Each session will have 2 rounds, so you'll play your first scenario twice and then your second scenario twice.
• Your goal is to make as much profit as possible by trading (buying/selling apples) with others in the class.
• In order to make a trade you must agree upon a price, fill out a sales sheet at the front of the room, and hand it to me.
• When I receive a sales sheet I will record the information on the board.
• Once you have made a trade in the round you are done (you can only make one trade per round) and may sit down.

Post Lesson 2/Pre Lesson 3

The class today GREAT. I gave it a Check+. We still need more discussion that comes FROM you all first and I must do a better job of allowing for that. Here are some major notes and we'll also have sean, kelsey, and doug post their insights/comments:

-We didn't mention it explicitly but our definition for the year is: Economics is the allocation of scarce resources which have alternative uses.

-The question is then how do we allocate which is what we talked about today

• Prices allocate by helping us to realize the value of an object...and we value those things RELATIVE to their other uses.
• Prices are not just an obstacle to our desires...they are information about how we ought to allocate our scarce resources (ie. time and money)
• Prices enable us to have lots of knowledge (the kind we need) we wouldn't otherwise have without forcing us to know everything.
• Prices allow for things to flow to their most efficient uses
• BUT...prices also have a cost and it doesn't always make sense to use them.

Prices are also subject to our economic principles....we'll see this next lesson and also in supply and demand.

Your prompt for your next journal is: Are prices usually higher or lower in low-income neighborhoods? Why? Think about how much it costs an individual to cash a paycheck.

Finally, your first initial reflection paper is coming up. Choose one of these questions to think about and please discuss with classmates:

Respond to this statement: Decreasing the price of gas will be good for me. It will lower my costs of living. Explain your answer with LOGICAL steps and economic reasoning. (i.e. A occurs which will cause B which causes (or may cause) C and D etc) Are there any exceptions?

OR

Teachers acts in ways that cadets often find baffling. Although most teachers are truly interested in your learning and in making your experience worthwhile they often do things which accomplish just the opposite, why? How would you solve this problem?

SEE YOU THURSDAY!

Pre Lesson 1/Post Lesson 2

Folks,

First here is my question for your journal (which you can replace either questions 2 or 3 with): We tend to think of costs as the money we pay for things. But does that mean that there would be no costs in a primitive society that did not yet use money or in a modern cooperative community, where people collectively produce the goods and services they use and do not charge each other for them?

Remember that your 3 standard questions are:

1. What was the thesis of this reading?
2. What was your biggest takeaway or what/how does this apply to your interests? (If you don’t know where to go here I will email a question for thought before each lesson).
3. What don’t you understand or what objection do you have?

Second, here are my thoughts on todays lesson:

Class today went well...though perhaps you all should be the judges. Note that without your contribution this class will be terribly boring. I'll keep up the energy as long as you do. On any given day I really encourage you to bring in a question or thought that might be bugging you and challenge your classmates and I to figure out how/what econ has to say about these things.

Welcome to ECON 201! This class is an experiment that we all are embarking on together.

There are some things I'd like to know about how to motivate you...what do you think the "best" way is for me to find out how to motivate you? Why do most of us act as if grades are a great motivator for you to work hard? Does this work? Why or why not? and most of all...what the heck does any of this have to do with economics?

-Capt B

Syllabus: \\AFAEDUFS10\cadet-data\DF\DFEG\Economics\Econ201\Fall 2013\Balser