Chapter 12 Reflection:

If you want to read more about government expenditures one source is the Economic Report of the President, available online here: http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President/2014 (Links to an external site.)

Now that you have had a chance to think about tax systems which type do you prefer - progressive, flat tax, income, consumption - there are quite a few possibilities.  How do you think the concept of equity or fairness fits into a tax system? Last year Colorado voted on a progressive tax system - the initiative failed and we still have a flat income tax system here (4.63%).  After reading this chapter would you change your vote?

The type of tax system that I would prefer would be the progressive tax system. I firmly believe that one should be taxed on the amount of money that is earned. So, if you are a high wage earner, you will pay more taxes, etc. After reading this chapter, if Colorado had a vote on a progressive tax system, I would not change my vote but keep it for the progressive tax system.

 

Chapter 11 Reflection:

Think of an example of a Public Good (not a publicly provided good, but a Public Good using the definition from the chapter.)  What are the costs of providing the good?  What are the benefits? Is there another way to have the good provided? Did this chapter cause you to think of Public Goods differently?  In what way? 

Review the definition of a public good before answering this - not all publicly provided goods are public goods.

An example of a Public Good that comes to mind as well as reading about it in the book is our countries National Defense. This is one of our countries most important Public Good. We need to have the defense of our country from foreign aggressors and we need to be able to defend our country in case of an attack on our soil. The costs of this Public Good are in the billions but I feel that it is well worth it and every bit necessary. But the cost is nothing to all of us. The benefits are that we have the freedoms to live our lives as we see fit without the threat of war, etc. There is not another way to provide this good. We need to have our military forces, ready to go just in case they are called on needed to protect our country.

Chapter 10 Reflection:

What is your favorite example of a negative externality?  Could the problem be solved via negotiation (Coase Theorem)?  How or why not? Do you favor regulation to solve this externality?  Why or why not?  

My favorite example of a negative externality discussed in the book was the barking dogs. This is a normal existence to all our lives to hear barking dogs. The neighbors are disturbed by the noise of the barking dog but this problem can be solved with either the owner purchasing a bark collar for the dog, dog training classes or sessions or a civil conversation with the neighbors. But depending on the situation, the problem can also escalate to “please quiet your dog or I am going to file a noise complaint.” And this would not be keeping the neighbors happy.

As for regulation to solve this issue, some dogs bark and some do not. Some people get irate by barking dogs and some do not. The government does enforce a do not disturb the peace which barking dogs would fall under this category. I would favor the regulation if I lived in a neighborhood and I had an excessive barking dog right in my area that bothered our family life but not if I lived in the country and I had several of acres between me and another property. Right now we I have a dog that occasionally barks at the wildlife around our property but that goes with living in the country.

Chapter 6 Reflection

The Venezuelan food shortages were partly the blame for the price controls and it is how the price floors affect the market outcomes. This is when rationing takes effect. In this aspect the sellers appeal to the personal biases of the buyers, maybe due to racial or familial ties, and then they are able to sell their products than those that cannot. Prices are what balances the supply and demand and will either help of hinder the economy. Sometimes the government can improve on the market outcomes and sometimes the price controls can hurt those that the government is trying to help. A good example here is affordable housing and the rent control. Another example is, when feed is too expensive for the farmer, then the cost is passed on to the consumer and the prices go up on their products.

Several years ago, the cost of hay went way up and was extremely hard to find. So if you had livestock, you were being gouged by paying an astronomical amount for hay if you could find it. But what do you do, your animals have to eat. During this time, we were seeing animals were being let go or were being found starving. This was so unfortunate.

You asked to consider a different case: After Hurricane Katrina, my brother was a truck driver during this time. It was a very scary time, yes controls had to be put in place or our society would have gone crazy. He was delivering generators and had to have police escorts to certain locations due to the demeanor of the people that he was dealing with. But by no means should have the price of the generators been made so high or a tank of gas, a bottle of water, a box of diapers been raised up so much that the people that were affected could not afford these items. But this is what happened even though controls were in place. People were hurting people over simple items. The concept of fairness was thrown right out the window during this time.

As for minimum wage, I truly believe that everyone that works hard deserves to make more money, but not at the expense of other employees. I have been watching the news and so many people are all for the increase in the minimum wage. I was a single parent with five kids so I know how tough it can be to make ends meet. But at the other end, companies will have to lay-off employees and get by with less employees or close their doors if there is an increase. So the problem is on both ends.

Chapter 4 Reflection

 

Yes, the prices of the taxi medallions would be affected. They would have to adjust their pricing to reflect the pricing of the Uber and the Lyft drivers to be comparable in the business. This does shift both the supply and the demand curve. You have more supply to choose from and prices may go down due to the supply is so high. This could also put some companies out of business.

An example of a supply of goods that changed quickly is when Walmart came into Rifle and completely changed everything. The supply and demand curve went crazy on this one. Of course, all of the mom and pop shops that could not compete with the big box store ended up closing because their supply was so massive.

I used a site to purchase airline tickets with a hotel. I know the hotels set some rooms aside for situations such as this. This does ride the price up on the other rooms to accommodate for the rooms that do not sell. It all depends on how many rooms they end up having to put in on a  promotion.

 

Chapter 1 Reflections:

Reading about the Ten Principles of Economic was very interesting. The principles that help people make decisions, discuss how people react to different situations and scenarios, and just how the economy works as a whole. Having a business during the economic downturn during 2011 was very tough and some of the topics that are discussed in this chapter really hit close to home. You asked the question, what in this chapter made you think about an economic concept differently than you previous beliefs? People facing trade offs in tough times and they also trade their time which is so valuable.