what we learned this week!

This week we learned about supply. Supply is a the willingness AND ability of producers to offer goods and services for sale. Law of supply is opposite to law of demand that producers are willing to sell more of a good or service at a higher price than they are at a lower price. 

We also learned about 6 factors that change supply curve.

• input cost = supplier’s costs increase
• labor productivity = increase productivity/decreased costs
• technology = better technology can improve technology
• government actions = can help or hinder production
• producer expectations = future prices affect production
• number of producers = more producers = more product

We also learned how to create production costs and revenue schedule.

It was a little bit hard for me to understand how to create the schedule. However, I think this is important to know how to create it and also how to see it because it helps us to know prices of products that producers want to put. It also helps us to know what price we should put when we sell something.

Tripling tobacco tax 'could prevent 200 million early deaths'

This week, we learned about demands and elasticity in class. Today I want to talk about elasticity using tobacco as an example.

Tripling tobacco tax 'could prevent 200 million early deaths'

published January 2, 2014/Reuters

Researchers said on Wednesday that tripling tobacco tax globally would cut smoking by a third and prevent 200 million premature deaths this century from lung cancer and other diseases. In a review in the New England Journal of Medicine, scientists from the charity Cancer Research UK (CRUK) said rising taxes by a large amount per cigarette would encourage people to quit smoking altogether rather than switch to cheaper brands, and help stop young people from taking up the habit, and it would affect not only in poor countries but also rich countries. Since tobacco kills almost 6 million of people a year, it will be good to put higher tax on tobacco as soon as possible. 

I agree with this article because in class I learned that products that are not necessity for people tend to be elastic, and tobaccos too are not necessity for people. Putting high taxes on tobaccos can make more opportunities for people who smoke to think whether or not to stop smoking because it will surely hurts their "wallet." However, I don't think only putting high tax on tobaccos is good way to cut people smoking, but making people aware how dangerous smoking is for our health is the first thing we need to do in order to cut people smoking.

The Article  <-- link to the article   

What we learned this week!

Hello! Did you guys enjoy your snow days? Because of unexpected days off, we only had 3 economic classes this week and therefore we couldn't learn much :( BUT! We started learning about new fun material which is DEMAND = desire to have and the ability to pay. For example, if you want some chocolates, and you have enough money to buy them, it is DEMAND. BUT,if you want new house, but you don't have enough money to buy it CAN'T be called as DEMAND.People tend to buy more when price of stuff is lower, and buy less when price of stuff is higher = LAW OF DEMAND. To understand these shift, we can use DEMAND SCHEDULE = a listing of how much of an item an individual is willing to purchase at each price and DEMAND CURVES = graph that shows the data from a demand schedule. 

ex)

Remember that demand curves always go downward :( <--

Demand curves are important to our business both producers and consumers because producers can know when they need to lower or higher a price of product, and consumers can know when a price of product goes up or down, and when to buy it. 

Demand affects our daily life too. For example, when producer sell new smartphones, he will put price little higher on them because they are new and have many attractive features that he expects many people will buy them. Then later, he will lower a price of them because they are not new anymore, and many other new smartphones will come out by then OR only few people bought them. And people who want to buy these new smartphone might wait until the price goes down, which means quantity of the smartphone will goes up. 

We are going to continue learning about demand next week and also we are going to have fun project to do!    
  

About Tax!

So this week, we talked about government and free enterprise system, taxes, and government's budget and spending in the class. First we learned when and how governments involve in a free enterprise system, and public goods. Then we learned about taxes including proportional tax, regressive tax, and progressive tax. Lastly, we learned about a government's budget and spending, which includes social spending and connection between tax and a government.
Today I want to talk about proportional, regressive, and progressive tax. In the class, we demonstrated these three taxes by fake money and us. We know that proportional tax is a system that everyone pays the same percentage of tax, progressive tax is a system that people with more income pay higher percentage of tax, and regressive tax is a system that people with less income pay higher percentage. 
So which tax structures should poor and developing countries have? At first, I think progressive tax is the best tax structure among all three. But I start to think that maybe it only affects in big countries which have range of rich and poor. Therefore, I think that proportional tax is the best tax structure for poor and developing countries. I think that way because in poor countries, most of people are poor and they really don't have rich people. Therefore, most of people have almost the same range of income, which makes me think that progressive tax doesn't fit in those countries. On the other hand, proportional tax which people have to pay the same percentage of tax, may fit more in those countries.

What do you think about my opinion?  

The Economic Impact Of The Winter Olympics

So today I want to talk about how the Winter Olympics impacts the economy!

The Economic Impact Of The Winter Olympics: Not Great For Russia But Sochi Stands To Gain

written by Christopher Harress 

on February 08 2014

The 2014 Sochi Winter Olympics kicked off in glorious style on Friday with an elaborate opening ceremony for what is expected to be the most expensive Olympic games in history, costing in excess of $50 billion and far exceeding the 2008 Beijing Summer Games, a record many said would never be beaten.

According to a report by the European Bank for Reconstruction and Development(EBRD), This astronomical cost will not boost Russia’s national economy in any way, but it may create a lasting legacy for the city of Sochi and the southern Krasnodar region of Russia, which will benefit from improved services that may attract business in the future. 

And while the EBRD report says countries generally do not benefit economically from hosting such events, infrastructure and jobs are created that last well after the games have moved on. This is especially important for emerging economies, because they tend to spend far more on hosting games than developed nations. In short, they are improving the lives and business prospects of the population in those regions.

(Olympic benefit to Sochi  IOC)

Olympics also create jobs, although most are not permanent. Russian currently has low unemployment but operates a tight labor market, which, as the report suggests, leaves limited scope for creation of new employment. 

(Which Olympics has created the most jobs  IOC)

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Do you think holding Olympics gives good benefit for country's economy?

I say both yes and no. I kinda think "yes", because the Olympic gives country many attentions, job opportunities, and money etc. I also think "no" because to hold the Olympic, country needs a lot of money to spend for such as ceremonies, traffics, places for athletes etc. Even though they also get benefits from ticket sales, food sales, hotel sales, etc., they don't get much profits because those money they get are not much different to money they spend.

So what do you think about that? 

Keep cheering for U.S. athletes in the Winter Olympics!:D

What we did this week!

So this week, we pretty much focused on market economy. 

Fundamental of Market Economy is:

• Private Property
• Everyone is free to own and use private property.
• Specialization
• Able to concentrate their efforts in areas where they have an advantage.
• Consumer Sovereignty
• Buyers decide what is acceptable by deciding what to buy and what not to buy.
• Competition
• Sellers are free to attempt to get the business of others by offering the best deal.
• Voluntary Exchange
• a win-win situation
• Limited Government Involvement
• Buyers and sellers must be free to operate with minimal government intervention.

Also we talked about free enterprise system: which is the same concept as the market economy, and circular, and the circular flow model:which shows us movement of goods, money, and services.

Today I want to more about circular flow model. I like circular flow model because it can shows us What process goods -- that we buy -- goes through and what process money -- that we spend -- goes through. I think to understand the circular flow model is very important in order to know more about economy. Also, in the circular flow model, nothing can be missed. To keep circle (economy) flow, we need all four Household, Factors of Product, Business, and Market.

Because we keep this process in balance, our market economy still work in today's economy.

Do you think market economy can exist without circular flow model? -- my answer is no. 

What do you think?

Next week, we gonna study more about circular flow model. This time, government will also join in the model and model will be more complex. So be ready everyone!

What We Learned This Week!

This week, in economy class, we learned about type of economy including 
traditional economy, command economy, and market economy. To whom 
forget what these three are, here is brief definitions of them!

• Traditional economy: an economic system in which people make economic decisions based on customs and beliefs that have been handed down from one generation to the next 
• Command economy: an economic system in which the government makes all economic decision
• Market economy: an economic system based on individual choice and voluntary exchange

Also this week, we learned about Adam Smith who was founder of Capitalism and Karl Marx who was founder of Communism, and did project of these two. We all did good job making dialog and presenting them! :)

Today, I want to talk little bit more about type of economy that we learned this week! 

I guess we kinda agree that market economy is the best economic system among of all types of economy. And I agree that too. BUT! even it has many pros in market economy, there are also some cons in market economy too. For example, market economy can make large gap between rich and poor. That's the big problem. How can we solve these problems?  In my opinion, there is actually no way to solve these problem completely. It will have been the problem forever in this world. BUT, if we really really want to loosen gap between rich and poor, the way we can do is volunteer. If we contribute together to raise money for poor, or give charity, shelters, or food for poor, we might be able to loosen gap between rich and poor in the future, even though it's gonna take long time. This is my opinion.

What do you think we should do to solve disadvantage of market economy? Let me hear your opinion on comment!

See you guys next week :)