"I feel 50-60% work.- Are you counting children? - I don't know are there children in308million?

Then yes i count children" Most owned by private individuals, a few rich Land Labor Most owned by private individuals, few rich Capital Production Distribution Most are made by the market.

Who does the work?

Who controls the factors of production

How are decisions made

Fiscal policy Government has influence too Monetary policy Compare our conditions with the rest of the world: they are better. Wealth is significantly less equally distributed than income 4 questions Few have positive wealth, many have negative wealth. Wealth: money over debt. Positive wealth. total value of assets What percentage of wealth belongs to richest 1%'of population? 38% of wealth 17% of income Richest 10% own 83% of wealth 51% of all income 10% 20% Economists try to divide the population into about 5 equal groups. This group is poorest/richest. What percentage owns how much Who produces the economic surplus? 1% 5 groups

Income vs wealth

What are peoples lives like

Who controls the economic surplus?

What do they do with the surplus? Everyone does the work. Whoever can work will work. All contribute. Tribe owns very little capital (money, assets (machine, factories).

Who works?

Capital Land Group ownership Who owns Factors

Group ownership, group decisions Decisions for maximum chance of survival Everyone fairly similar. No one very rich man. Living standard a lot of free time These groups move around The smartest person takes the next smartest people to make sure the others work. Whatever additional is produced. Produce more than we need to maintain our standard of living. Agriculture created this. Major Econ development Slaves Who did the work? Economic surplus At the end of the season they realized they had more corn than they needed. Then the strong ones realizes they can take the extra from the other workers and you don't have to work.

Primitive Communalism

At some point primitive communalism began to cultivate land. They no longer moved around. The development of agriculture. Once this happened...

Emperors, generals, high priests

Who owns the factors of productions? By nobility

slave masters, ancient Greek and Roman Empires Great for nobility, terrible for workers

How are decisions made?

Slavery

Marginal cost: additional cost over what is already spent (sunk cost). Marginal benefit, additional benefit above what was already gained. Opportunity Cost: the benefit that you might have gained from next best alternative. Chapter 1 Economic Force: reactions to scarcity

MB>MC=Do it MC>MC= Don't do it

Living standard? Questions

Slaves

Who produces economic surplus?

uncontrollable society can control

Same who own the factors of pruduction

Who controls economic surplus? Market Force: change in price

Owners spend on luxury One group of slaves cultivated the land, generating the surplus. The nobility took the surplus and spent it on another group of slaves who would build things: colosseum etc. Finance army, buy weapons, clothing, war. Serfs (property rights), peasants. they belonged to the feudal manor. Manorism. Who did the work? serfs could not be bought or sold Nobility Who owns the factors of productions? Lord, ruler of manor Decisions made by rulers How are decisions made? Questions Great for nobility, bad for serfs Living standard? Feudalism Section 1: The evolution of Economic Systems Serfs Who produces economic surplus? Absolute advantage A country will have this if the country can produce the product better (measure by producing more with less resources). Produce better Who controls economic surplus? Read Appendix of Chapter Two What is done with economic surplus? Think of Europe, 900 years ago. Italy. Employees Who did the work? Households Own and provide factors of production (land, labor, capital) Factor market Graphs Econ Chapter 2 Trade/Comparative Advantage Produce with lower opportunity cost If the opportunity cost is lower for one option, that option has a comparative advantage. Factors of Production Invisible Hand: Price mechanism, the rise and fall of prices. What is done with economic surplus? Production Possibilities Assume: efficent Land Labor Visualize factories, machines, tools, infrastructure. Assume: time does not change. Static analysis

Not every slave is productive. The producers (farmers) are. Not the monument builders.

Capital

Nobility

Buy luxury, put serfs to work. Build castles. Finance war.

Buy GAS, consume.

Consume about 2/3 GDP

Consumption measured by Consumer Confidence

Private ownership. Small number of people own most Market. Role of the market became more important. decisions are made by a small group of people, presidents, managers, stock holders. But as for the economy, economic decisions succeed or fail based on the market.

Who owns the factors of productions?

Labor force is 150 million Product(goods and services) market.

Need factors of production

Businesses pay wages, rent, interest, profit.

How are decisions made?

Profit

Main goal: they will produce harmful goods as long as its profitable Propietorship 1 owner More than 1 Produce 90% 20% Corporation Limited legal liability. Only the company can be dissolved, not the uninvested assets. Member countries> concerned with economic growth of developing countries. Lend money at low interest rate to poor countries for them to improve infrastructure, educations. Financial sector Value of money. If problem, the IMF steps in. Imf imposes restictions. They have a bad reputation for harsh restrictions. Every time imf lends and says to tighten their belts. Rules of trade

Businesses Capitalism: don't think about US. Vast majority of countries are capitalistic but are poor. Also, unequal distribution. Employees Living standard? Questions Who produces economic surplus? Capitalism

80% Partnership Ownership

Capitalist. The few. Some of surplus goes to government. Who controls economic surplus? presidents, managers, stock holders Very small fraction goes to luxury. Much goes to reinvestment, not to castles and monuments. Sure, they have luxury, but this is a very small amount of excess. The feudal lord used must of the surplus of that year to build the castle. Capitalists would not do that. The development of capitalism lead to the reinvestment of surplus to create more surplus. Whoever is able to will work. Who did the work? World Bank

Major economic development: investment

What is done with economic surplus?

International Monetary Fund Global economy International institutions. Most famous are related to United Nations

WTO: World trade organization

Communal ownership

Who owns the factors of productions? Retired people Healthcare Questions Biggest expenditure Income security Largest part of income security is social security Poor Bigger problem than social security

Living standard? Whoever is working

Who produces economic surplus?

Everyone, community/society does. Whatever they think is necessary. A significant part, like capitalism, is used for investment. To make a greater surplus.w

Who controls economic surplus? Socialism What is done with economic surplus?

Econ Chapter 3 Kevin Paffrath

Federal

Largest income: income tax, payroll tax, FICA Trying to create jobs. Biggest expenditure: education State Income: Sales tax (tax) Cannot have deficits: states cut jobs. Local Circular Flow Model (p60) Simplified view of economy Economic Systems Socialism: the concept of fairness Income: property taxes Then public safety etc

How are decisions made? that failed Kibutz in Israel, extreme socialism. Children belong to community Its like a family having a dinner. This is based on socialism. Food is made and distributed. Everyone gets adequate share. If capitalist, the strong and wise will get the best part. Weak and slow will have empty plate. Life is unfair, lets try to make it fair Want to see socialism? Department of agriculture.

Look at colorful pie charts Rely on market to decide what and how much and what price to produce When market can't decide, the government becomes involved. Government should redistribute

Capitalism: life is unfair, get used to it. The distinction between capitalism and socialism over the last 50 years have diminished. Socialist: soviet union, china, cuba, have moved to the center. Capitalist countries had more govt involvement, and moved closer to the center. 3 major economists: Adam Smith: capitalist, Karl Marx: socialist, famous criticism of capitalism, Keynes: liberal

Chapter 3

Poverty and the redistribution of income is a market failure.

"you lose your job in recession: not because you lazy bum, but no need" Only one producer, seller. Produce less, high price. First in 1890

Monopoly Capitalists (Kists) exploited working class. The working class: proletariate. Karl Marx Appendix Government

Anti trust laws

Wellfare capitalism Assume there is no government. Unstable economy Cateris Paribus: all other things remain constant. Most important thing in economics. Assume the goal is to make a profit and that there is competition. For the market to exist, the role of production should be profit. Most important variable that affects the behavior of consumers (demand) The word "sale" entices buying. Law of demand: price goes up, quantity demanded goes down. Price goes down, quantity demanded goes up. Quantity demanded goes up or down Other factors: demand goes up or down(shifts left or right.) Price of pro club t-shirt goes up A: demand goes down B: quantity demanded goes down B! Price (P) Public goods List of market failures: Government function p66-71 Market failure

Ups and downs of business cycle. Government tries to stabilize the economy. Fiscal policy Monetary policy Taxes, national government action Federal reserve, interest rates, money supply

EG: Pollution. A negative - unintended -side effect that others pay for Negative Externalities Cost of production is externalized--doesn't affect the companies budgets. Positive Positive - unintended - side effect.

An entrepreneur will nor provide a service if there is no profit. Free rider Using the product without paying

When price changes you move along the demand curve. When the other factors change the demand curve shifts. Information What affects demand Demand Poverty coke and pepsi Generic brand Inferior goods Most goods are normal Other Income Government: 20% of output, 80% private business. Chapter 4 Substitute Price of related goods Complimentary Number of Consumers Expectations Other Profit: TR-TE. Revenue: P*Q Price 72% (over 50%) of econ is services Eg: Financial, healthcare, education (what are you getting at end of lecture? Nothing), Biggest sector in services: retail Real flow: land, goods, services, labor Market: a market exists when there are buyers and sellers Money flow: money from paycheck to business and business to paycheck

EG: national defense, highways, disaster relief, dams, light house When the senators read that book and realize that every morning they ate their eggs and sausages: [slaps pen at board: FDA]

Buyers need information. EG: food, FDA

Book: The Jungle 1905

Sausages had dead at and dust and dirt and all parts of cow.

Taste

Toyota problem eg, consumers need to know safety

Demand goes up when income levels go down

Anything else changes: change in supply

When price changes, the supply curve does not change, there is a change in quantity supplied. Cost of labor Cost of materials Cost of machinery Cost of transportation Cost of taxes Technology Number of producers Law of supply Variables that affect supply Supply

When profit goes up, suppliers produce more. Mental note: 9-23-10

Supply and demand Test from book or notes?

Questions:

coercion: limiting people's wants, getting them to dow something productive Buyers suffer Standard of living will fall, as consumers suffer. City of new York imposed a price ceiling for rent. Equilibrium price is low Sellers suffer, cant Recover cost of production Farmers Government installs price floors frequently to support agriculture One of the functions of government is redistribution of wealth. Income goes up. Percentage you are paying goes up too. Family that earns 20,000 and family earns 100,000. Progresive: A pays10%, B pays 25% A uses 20K for necessities. They will cut necessities. B will just buy less luxuries. Most agree that progressive is fair. In order for it to be fair, the burden must be equally distributed. Makes the burden more quality. Income taxes A pays 10%, B pays 10% Taxes Proportional Progresive

Notes from Reading

Equilibrium price is high

Price ceiling

Price floor

Chapter 5

Sales tax, excise tax (takes up less percentage of family wealth). Regressive A pays 10%, B pays 5% Argument: you tax, people wont innovate and produce. What's the problem? Consumers are not buying. Demand is low. Government should take actions to regulate demand. If government gives money to poorer, they will spend. Increasing demand. 1950's: highest tax was 90% 1970's: 70% 1982 : 50% 1986 : 28% bush Senior 31% clinton: 39.6% Bush w : 36% Obama wants 39.6 Income tax Excise tax: Kinds of taxes Make imported goods more expensive Tariff; tax on imported goods. Multiple choice based on Colandar first 5 chapters. Almost all we dicussed. Read sections in book Midterm Test Short answer from first 15 pages Scantron 882.

State taxes, federal taxes (plus sales taxes)