Thursday, September 8, 2016

G11 - Week 4 - Day 2

In-class work
  1. Market Equilibrium, Disequilibrium and Allocative Efficiency
    1. Exercise 1 & 5-8 (p. 58 & 66)
  2. Consumer Surplus and Producer Surplus
    1. Exercises 9-13 (p. 70)
  3. A Supply and Demand Paradox - the Chevy Volt versus the Chevy Cruze
  4. Finding Equilibrium using Linear Demand and Supply Equations (HL Only)
  5. Consumer Surplus and Producer Surplus in the Linear Demand and Supply Model (HL Only)
    1. Exercises 2-4 (p. 64)

From the blogosphere
  1. Why are movie stars paid more than firefighters?
  2. Why Uber Is an Economist's Dream

Currently Reading

Creating a Learning Society
"We can now see the essential trade-off. If the government can induce a small shift in consumption [today] from [agriculture to manufacturing], then there will be a small decrease in welfare [today], but [the future's] production possibility curve will shift out, by an amount reflecting the increase in growth (enhanced learning) resulting from the increased industrial production, generating an [overall] improvement in welfare. Hence, welfare is unambiguously improved. It always pays for government to encourage the learning sector." (Kindle Locations 5545-5550)


  1. 5.a shoes I had, the price of that .
    6.increasing demand, so demand curve move outwards, the price goes up
    7.according to the law of supply, the scarcity of goods(resources) causes the higher price.
    8.A higher price will cause consumer to ration the goods. they believe the price of the good in future will be higher than now. because consumer only ration a good, there are increasing demanded in future.

    1. also less consumers are able to buy the goods.

  2. 5. An IB economics book
    6. Because there are more people being educated, and more information being made available about economics and I belive that the inccreased in supply.
    7. As the price is high this shows that there is a scarsity in other books in the market of IB economics books and for the added information to the book
    8.The price is so high then that it is naturally rationed out because everyone is not to buy as many

  3. 5. A Sarasa pen used to cost 1.20, and it got raised to 1.80.
    6. In my opinion, it was due to the increased demand, as Sarasa pens started to become more highly available in stationary stores. They had more monopoly power which gave them the ability to increase the price.
    7. The price is quite affordable, which tells us that the resource which is plastic is not very scarce. If plastic was a scarce source, it would probably have a higher price.
    8. People may stop purchasing multiple colors of the pens, and just stick to the ones they really need. Although, the price increase isn't a very large difference to the price in general.

  4. 5. In a scenario where a storm passed by, the prices of vegetables and fruits rises
    6. Decreases of supply made this happen since some vegetables/ fruits die during the storm
    7. When there are less of a good, the price of that specific good increases
    8. Since the price increases, less consumers would be both willing and able to purchase the good, therefore it's less possible for a shortage of the good to occur

  5. Pag 66-
    5) The price of phones has increased in the last few years.
    6) The price of phones has increased because the technology is becoming more advanced so the resources and the cost of productions increase. The change of the needs of the people has increased the demand for new technology in the phones in last few years.
    7) As the newest phones become more scarce, the price of those phones will increase in order to make more profit.
    8) If the price is higher than the willing to pay of the customer, the demand of the product will decrease because the phones price is higher than what they would pay for the phone

  6. Exercises: Page 66

    5. The price of new and developing cell phones, even of the same model.
    6. The advancement of technology and innovation is the reason for the price increase. The demand for new technology increased due to the popularity as well as taste and preferences of the product.
    7. If the new phones are selling out extremely fast and the item becomes scarce, the demand remains high but the supply has decreased, so the company is able to sell the scarce products for a higher price.
    8. If the price is higher than the consumer is less likely to buy a higher quantity. Also, if only a certain amount of the product is needed, a consumer will not buy more than they need. So if they need a maximum of 2- 3 phones (one for business, one for family, etc), it is unlikely that they will buy more of that product for a certain amount of time (until their phone breaks or out of date).

  7. 5)the price of iphones have increased over the years
    6) through more innovation in the area of smart phones, the technology of iphones has become significantly better and as a result the price of the phone would also increase as the phone becomes a better piece of tech. Which serves towards the taste and preferences towards the consumers
    7)As a newer iphone is heavily demanded, the supply will run out fast and hence the price of iphones will increase whenas the older iphones will be less demanded while the supply of them are still high as a result the price will decrease
    8)the higher the price of the good, the less beneficial the consumers will see to buy more of the good because the total cost they are willing and able to pay outweighs the benefits to the consumers

  8. We can take a simple example of a chocolate bar which was $1 last yr and has increased to $1.40 this year.The reason behind this may be an increase in demand dude to a growing population and the lack of resources.
    There has no been much difference in the drop of the product after the price rise as many of the people get addicted to it and can’t stop consuming it.

  9. 5. Price of water increased in California, due to droughts
    6. Decreased supply, apparently due to global warming
    7. The price increases as there is a scarcity of water
    8. As the price is increasing, and is expected to increase for the next several years, people may start rationing water, as many kinds of water doesn't expire for a long time.

  10. 5. Gold
    6. It increased because it was not profitable for the companies to give more product for the same price. So the consumer surplus was higher than producer surplus.
    7. Scarcer the good bigger cost of production will be. So if the company spends more money to create the good it will increase the price of a good.
    8. People are buying more gold now because it's cheaper then in near future. They buy to sell later for the bigger price

  11. 5. Petrol
    6. It was increased due to increased demand.
    7. The increased price speculates on the fact that petrol is a non-renewable resource and is very scarce.
    8. People will start rationing the necessity of driving vehicles and might start opening up to other options such as walking, taking the bus, taking the mrt, etc.

  12. 5. Flight tickets.
    6. During the holiday seasons the demand is higher.
    7. The scarcity is the fixed quantity of seats.
    8. Consumers may buy the flight tickets earlier because they know that it will become more expensive in the near future.

  13. 5) Oil
    6) The supply of oil in the world decreased, meaning that the price of the product increased. In order to maintain the production and resource price.
    7) As scarer the good becomes, the higher cost of production increases. So the company must spend more in order to continue producing the good.
    8) As the price goes up, people will buy large amounts of the good before or at the start of the price increase. In order to same the most money.

  14. 5) Cost of water increased in California while I was in the US
    6) There was and is an ongoing drought in California, making the supply of water reduce. The demand for water remains the same.
    7) The price increasing can be considered an indication that the scarcity of a good is increasing. As price increases, scarcity increases & vice versa.
    8) The price increasing lowers the consumer demand for the product, forcing them to ration and more effectively use their product. They will waste less because the supply is short.

  15. Question 5,6,7,8 p 66

    5. Price of some shoes due to the high demand.
    6. The price of the shoes increased due to high demand because it was new model.
    7. The price is related with the scarcity of a go the good. The lower the price is, the more people will be attracted and the product will be sold quickly. However, the higher the price is, the more time the product will stay on the market because it will be hard to sell to consumers that expect a lower price.
    8. A rationed good will be linked to a high price. Indeed, the higher the price is, the less able and willing consumers will be to buy the good, and therefore it will be harder to provide yourself the good.

  16. 5) Example 1:price of bread had increased during great depression.
    Example 2:Recently the price of phone have increased significantly

    6)With advanced technology , the iphones has become significantly better and as a result the price of the phone also increases as the phone provides better facilities and have become quite convenient .

    7) As the demand for iphones increases the quantity supplied will eventually run out and will result in increase in prices for the product.

    8) As prices increases the demand for the good will reduce

  17. 5. Pencils
    6. It increased because the school year started. It was due to an increase in demand because obvious reasons.(Notes, tests, eyc.)
    7. When the price of pencils go up, it shows that the resource costs are also going up and the firms producing it needs to make a profit.
    8. When people have to pay more for pencil, they will value them more and lose them less.(hopefully)

  18. Pg 66

    5. The price of milk increased recently.
    6. The price of milk could have increased due to an increase in the cost of production of the farmers which led to a decrease in supply. In this case, it is possible that an increase in the cost of feed led to farmers needing to cut back on cows, which led to them not being able to keep up with the demand as there was a decreased supply.
    7. An increase in the price of the good indicates that the resource is scarce. This is because scarce goods allow producers to sell it at higher prices not only to gain enough to meet their cost of productions, but also to gain an additional profit.
    8. Due to an increase in the price of milk, people will have to ration their supply. The people might drink less milk each day and might even start using substitute goods such as soy milk.

  19. 5) School lunches used to be $7 and free refills then they made it $7 and you have to pay have $1.50
    6) I think that they up the price is because of the fact that they want to make more money and they are the only one.
    7)The signal that is sends is that the food that they are serving good quality food is becoming more scarce.
    8) The thing that this says is that people are still going out to get one bowl of food but people are not going out to get seconds.

  20. 5) Roses (during valentines day)
    6) Due to an increase in the number of buyers, high transportation and storage costs
    7) An increase in the price of roses indicates higher costs of production and/or producers are unable to keep up with the rising demand.
    8) May continue buying roses (due to it's symbol) (Veblen good) or may switch to chocolates and other flowers.

  21. 5. shoes
    6. because the shoes is a new style, the price of shoes increased due to demand increased
    7. when the price become lower, the more people will be attracted and the product will be sold quickly; but the higher price won't have many consumers. so, the price is related with the scarcity of the good
    8. consumers may choose the price that is appropriate and the shoes also suitable.

  22. There are 4 factors could influence the demand. And the graph shows that there are inverse relationship between demand and supply. Also, the graph of demand's slope always is negative; the graph of supply's slope always is positive. If put those two graphs together, find the interacted point.

  23. There are 4 factors could influence the demand. And the graph shows that there are inverse relationship between demand and supply. Also, the graph of demand's slope always is negative; the graph of supply's slope always is positive. If put those two graphs together, find the interacted point.