I prefer the flat tax system. I think this tax system will give people more incentive to make more money or expand a business they usually might not expand. With the flat tax system, everyone is taxed the same percent. A downside to this system for some is that there are no exemptions or deductions. With everyone being taxed the same percent, no matter their income, people will be more driven to make more money because they will still be taxed the same amount. I believe that equity and fairness plays a huge roll in the tax system. The rich want lower taxes, because with most tax systems they will pay more taxes. Those who make less want to pay less taxes because they are making less and usually think that those that are making more should pay more in taxes. I personally, don’t think there is a way to make everyone happy, but can come close to it.

I believe that Trump’s tax bill will lead to only a short-term growth in the economy. Overall, I don’t think it is going to make a big change in the economy. Below is evidence to back my thoughts:

“Most broadly, the tax cuts have not generated the promised growth of 3% or more – even in tandem with the additional stimulus of large government spending increases that Congress enacted separately. After an uptick in the second quarter of 2018, growth declined in the next two quarters to end up at 2.9% for the year.”

“Goldman Sachs economist Jan Hatzius says that second-quarter surge – initially measured at 4.2% but later revised down to 3.5% – represented the tax law’s peak impact. He expects it to vanish altogether by late this year or early 2020, as the economy returns to the same 2% growth levels Trump inherited from President Barack Obama.”

“Those levels assure the failure of another tax cut promise. Trump and congressional Republicans insisted the law would spur so much economic activity that surging new revenues would replace those lost through lower tax rates.”

Source: https://www.cnbc.com/2019/08/16/trumps-tax-cut-isnt-giving-the-us-economy-the-boost-it-needs.html

Public goods are goods that are both non-excludable and non-rival in consumption according to our book. The public good that I thought of was air. A person cannot be prevented from using the air, nor can they be limited to how much air they use (in most cases). Currently there is no cost to providing the public good of air. If pollution continues there maybe a cost to have cleaner air. The benefits of air are endless; it is what we use to live. There is currently no other way to provide this good, as it is natural. After reading this chapter, I realized how many items I originally thought were public goods, are really not.

I-70 was the first thing that came to mind when I thought of a negative externality.  I do not believe that the Coase Theorem could solve this because not everyone will be better off if the traffic issues are solved. I do think that a tax regulation could help solve the traffic issues. With everyone from the front range heading up 70 at around the same time to ski and also departing at around the same time, it creates congestion. People then loose their time sitting in traffic and as we all know, their patience. The cost to people would be higher taxes to either expand the roads to allow traffic to flow more freely or a tax (toll) to drive on this road. While I don’t think a toll is the way to go as we already have an express lane which many people use illegally.

Twofold

I choose this word to help describe a graph showing deadweight loss and taxes. That is because when taxes increase, deadweight loss increases. When taxes are higher it causes the deadweight loss to increase which then changes the current economy at that time because consumers are consuming less and producers are producing less.

Describe efficiency from the perspective of an economist.

Economist think of efficiency as when all resources are being properly allocated to maximize the surplus to society. It is known to be inefficient when potential gains between buyers and sellers are not being realized. The economy is efficient when goods are at the lowest cost. One side, buyer or seller, cannot be helped without making another worse off.

Why are producer and consumer surpluses important in determining market equilibrium?

Knowing how to calculate both consumer and producer surplus and how they shift the supply and demand curves will help determine market equilibrium.

Should market efficiency always be the goal of policy setters?  Why or why not? What might an alternative be?

I do not think that efficiency should be a goal of policy setters. While it might look good when they write up the policy on paper, it is unlikely that it will all happen the way it was written up. Having a policy to make a economy efficient does not seem like a good idea. Alternatively, I think they should focus on equality as a policy. There can be written rules to make sure there is equality with prices.

The government in Venezuela is setting price ceilings on food. Their intent for doing this was to help make items more affordable for the poor, but it has some what backfired. When setting a price ceiling on items, those producers start to produce less or maybe even close their business down because they are hardly making a profit. This then makes those items even more scarce and harder to get, for both the rich and the poor. Price ceilings are not always helpful.

If a price ceiling was imposed on the water after the hurricanes, it could have done more bad than good. While price ceilings are imposed to help people save money, there can also be a downside to them. Those selling the water might then decide to lower the amount supplied because they are not going to make as great of a profit. The demand would still be high because everyone needed bottled water. With the supply lower, some will not be able to get bottled water. Fairness comes into play because these people needed bottled water, but the suppliers also need to make a profit of some sort. It is hard to say which way to go, because you can’t predict the future.

The increase of the federal minimum wage has been a long debate. Increasing the price floor, minimum wage, can have multiple affects. As described in the article, increasing the minimum wage would great for close to 17 million people. The downside to a price floor on wages is that people also loose jobs. Employers may layoff more employees because they can’t afford as many at the new wage. The debate is what increase amount is best for all? Also, does the small amount of jobs lost compared to the amount of people who get raises outweigh each other?

https://www.wsj.com/articles/15-minimum-wage-would-leave-1-3-million-american-jobless-lift-as-many-out-of-poverty-11562611503

I went into a few snowboard shops in town and saw that they all had their own way of displaying. Most of the stores had all of their items that were on sale in one area together. They were usually last years’ boots, boards and bindings. They knew that they had to sell these items at a discount because no one was going to pay the full price for last years’ board, when they could get this year’s board for close to the same price. One store I went into had all of their boards in one spot. I asked if they had any of last years board still and if they were on sale. They had some and didn’t have a set sale price for them. I would have had those displayed better and marked at a sale price that was significantly lower than this year’s model board. They need to know that those boards are elastic and that they can be substituted for a newer board. Having them displayed better and on sale will help them get rid of inventory that is loosing more and more value everyday as it becomes older.

With Uber and Lyft becoming more available, Taxis are starting to phase out. With more people using Uber and Lyft, both the supply and demand of taxis will decrease. When the demand of taxis is less, the demand curve shifts to the left. With the demand being lower, there will be less of a supply of taxis. Therefor the supply curve will also shift to the left to represent less taxi’s supplied.

This past week in Summit County, the demand for snow plowing has increased. While the supply stayed the same because there are only so many people who plow, the demand curve shifted to the right. When this situation happens, plow companies can charge more and pick which jobs they want to take.

With the new 40% sales tax on tobacco products in Summit County, I believe there will be a surplus of tobacco products because the market price will be above the equilibrium price.

1. It is certainly true that some people have lost jobs due to increases in international trade.  It is also true that some people have lost jobs due to changes in technology.  Should we treat those two causes differently? Why or why not?

I do not think we should treat those two differently. They both cause job loss because of the cost to produce a item is lower with new technology or having the item made out of the country. Business are not going to decide to keep people employed when their cost could be lower with technology (robot/machines) taking the place of them and cutting their cost down. The same is with international trade, companies will outsource if it is cheaper for them than keeping people employed and not making a greater profit.

2. How important is production efficiency to sustainability?  How is trade related to efficiency?  (This question is really for the many sustainability students in this class.

 While I am not a sustainability student, I believe there should be a balance between efficiency and sustainability. Some companies might be very efficient, but not sustainable at all. While other companies are very sustainable, but not very efficient. it comes down to the ethics of each individual company. Trading is sometime more efficient than a company possibly producing that item on their own as it make take them too much time and cost too much.

1.How does the use of a very simplified model of the economy such as those found in a production possibilities frontier help you to understand the economy?

The PPF is a curve that shows the number of x units can be produced if they require the same resources. Looking at the PPF can help with understanding the economy by finding the most efficient amount of each unit to produce. It also shows how we face tradeoffs when producing items that require the same resources. If you want more of one item, the tradeoff will be that you then will produce less of the other item. It can also be used for business determining how much to produce of each item to maximize their sales.

2. The buy local movement is fairly strong in Colorado.  How can you think about it in terms of the PPF?  Watch this video: http://www.mruniversity.com/courses/everyday-economics/buy-local-movement-shop-small-business (Links to an external site.)  How do his arguments relate to economic efficiency?

The PPF could be used by a local business to see what products they might want to get locally and which they would not get locally. A winery in Palisade might use their local grapes, but outsource for the glasses bottles needed to bottle the wine. They could use the PPF to see what would be the most efficient route when trying to “stay local.” This argument relates to economic efficiency because it will not always be efficient for a local store or business to get everything locally. To be as efficient as they can be, they might have to get products that are not local or even from outside of the country.

3. Give an example of a positive or normative statement about the economy.  Why does it matter which it is?  (If you happen to have a favorite example of a politician or political candidate confusing the two include it here. :^))

The unemployment rate in the United States is currently 3.7%

The unemployment rate should never be above 10%

The importance of whether a statement is a positive or normative statement is very important. People may hear a normative statement and belief it is a factual statement when it is not. Knowing the difference between the two types of statements is very important. Many politicians will make normative statements that people then believe right away and are not fact based statements.