Topic 5: Ripple Effects and Elasticity

Elasticity greatly depends on the product itself. If it's essential, it would probably have a low elasticity. If it's not essential and it's mainly recreational or additional, it would probably have a high elasticity. The higher the elasticity, the higher percentage change of quantity demanded would occur with each percentage change of price. The ripple effect, as I see it, is kind of like collateral damage, only it doesn't have to be damage. It is a side effect that came along with doing something. Oil is probably the one good that has the most ripple effects. It affects car prices and transportation in general, tires, asphalt, and other things that are made with oil. The rising oil price might affect our lifestyle in that we would drive less often and rely more on public transportation or walking. Also, I am almost 18 and I might be buying a car after college, if cost of many components of an automobile is related to oil than price of a car might rise significantly. The rise in oil doesn't just affect transportation, a lot of other products, good, and services all require oil. Because oil is such an essential resource for the production and utilization of other goods you might own or use, it creates a chain effect that might increase the price of some goods and services and decrease the price of some other goods and services. Another essential product is water. If the price of water rise significantly, baths would be taken less often, maybe people would drink less soup because it might spike up the production cost of soup. Another example is salt. Salt is used in daily culinary tasks and a rise in price of salt could definitively increase the price of many restaurants and food in general. Some products, like Iphones, have close substitutes like the Galaxy S III phone made by Samsung. Because of a close substitute, the elasticity is really high. This is because an increase in price in Iphone might cause a lot of people to not buy Iphone and instead buy the Samsung phone.

Where Choices Lead

Everything we do has a cost, a tradeoff. Indeed, I have given up a lot to study at PAS. Not just me, my parents have likewise gave up, even more, for me to study at this school. The tradeoffs are huge and mainly is the time and money spent. However, the opportunity cost is a different case. The opportunity cost is the highest alternative given up. For me, I think the opportunity cost of going to school is working at a factory or at a farm and losing the opportunities that I could have to make some money. In particular, the opportunity cost of attending this class is the opportunity to attend a nutritious course. By nutritious course I mean a course where it's easy to get an A or above with. This is the best alternative for me because during the senior year, the second best alternative of this block, which I've taken almost all other classes, is not to learn more, but to improve your transcript. I think the decision of attending this school is rational because without education, I doubt I could go to get a lot of money. My other opportunity wasted is the chance to go to a cheaper school. Though maybe might disagree, I believe going to the states for an education is definitely better. Though the economy of the United States is down right now, I believe it will be better soon. Also, if I were to come back and work in Taiwan, have a American School diploma from a renowned school could really increase my job opportunity. Furthermore, English is a prevailing language now and I believe learning English is a very important factor to success. Attending this class is rational because I believe economy is very useful. First, economics is almost always something you have to take for the first two years and by taking the AP course I could waive the credit. Additionally, I've learned Macroeconomics and it doesn't feel right not learning Microeconomics. The benefits definitely outweighs the cost. By spending this great deal of money, I am able (hopefully) get a job that's more rewarding faster, easier, and with more certainty and thus, this investment would be a rational decision that I would choose for myself also.

Incentives to Attend School

Incentives used by the schools in the videos are to encourage students to attend school more, study and strive for graduation, and in general increase the motivation for students to work harder. Incentives is the reward that one gets for doing an action and the higher the reward, the more motivation it has against the cost of doing something, whether it be financial cost or energy cost. There's a high school in Texas that gives a student a free car if he has perfect attendance. That is truly amazing because I am a person of almost perfect attendance and by now I should have four cars already. I really like that plan. However, I don't think it's wise for the school because this will mean that for students to have perfect attendance, the benefit SHOULD outweigh the cost of a car for it to be a good decision, which I doubt. The PAS approach is of a different direction. Instead of giving incentives that are rewards for perfect attendance, PAS gives punishment for people that are late to school, or people who doesn't have a perfect attendance. I don't like this approach but of course this is a lot more cost effective because it kind of gets the job done. The goal however, are the same, and is to try to get people to go to school on time. However, I think the reason they implemented this approach, (Texas and Massachusetts), is because they have way too many people missing school. In the more academic focused environment, PAS uses punishment on late policy, which is a little bit extreme in my opinion.

Scarcity at School?

There are actually a lot of scarcity in school. If we don't consider it much, we don't notice them very much. But when we attend to details, we find out that there are actually a lot of scarcity. For example, the scarcity provided by homework. Although it is not DURING school, it is still a scarcity that is caused by school because when the school gives us homework that we have to complete, we are losing time for other things that we could've been doing. Another scarcity we face is for the electives in school curriculum. There are only a maximum of eight courses that we can take each year so if you have eight courses that you must take in order to graduate, that means you can't take the ones you find interesting that would drive your passion. This is causing scarcity in time and more specifically, in the number of classes you can take. I like to think of scarcity as things that you must do and the things that you want to do. That's the biggest problem with students. Most students that don't succeed is because they chose things that they want to do rather than things that they must do. I don't mean things that they must do in order for their continue existence or survivability. But I'm using it in a student point of view, which might be controversy, but this is my journal so there's no controversy. Things that a student must do I see as things that help a student succeed. Now this could be controversial too, but whatever, I'm the boss here. I'm just kidding, but I think you get my point. Scarcity is everywhere, with every decision you do.

Big question

Economics is essentially the study of consumer and supplier choices while Microeconomics takes a step further into examining who, what, for whom, and all kinds of questions of choices that arise from production and consumption. When we look at choices, we look at logical choices instead of illogical and unreasonable choices because those choices bias the result and our analysis. For example, we don't study the case where a terrorist organization forces six million citizens of Vietnam to purchase diapers manufactured in China because those has nothing to do with logical and rational choices. We examine rational choices because those choices came from reasonable analysis and from the analysis we can predict choices and understand the mindset of the people and the market. What, how, and for whom goods and services get produced are essential questions that economists try to figure out because it is why things are the way they are in the world. Why does pepsi sell coke instead of pizza or why does Steve Jobs give computer to rich people instead of hobos. In PAS, if people are consumers and buyers of the community, the services provided would be education and the teachers would be the seller. The students are the consumer of the service and who gets the service is determined by Pamela who admits different students.

Sometime choices made in the personal interest could benefit the social interests. This might happen because when someone make a personal interest, it is made through logical and reasonable analysis of cost and benefit of the decision that disregards it's social impact. When a decision disregards the social impact, it can do a number of things; it can have a positive impact that benefits the social interest (a person giving money to poor people because he had too much change in his pocket and it became hard to walk while he was in a poor district) or it could harm the social interest (a woman killed fifteen people while she blew up the office building of her cheating husband) or it could have no social impact at all (A banker took a step towards his office to get to work)!