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Class2

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Class2

  1. 1. Economics for Journalists Week 2: Supply & Demand Jeffrey TimmermansMonday, 28 January, 13
  2. 2. Review: What is economics? ✤ The study of how people deal with scarcity ✤ Nothing is available in unlimited quantities ✤ This requires making choices, making trade-offs ✤ Businesses & governments use incentives to influence those choices ✤ Under the classical model, people always make choices rationallyMonday, 28 January, 13
  3. 3. Economic DiariesMonday, 28 January, 13
  4. 4. Absolute advantage “ The producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.” – N. Gregory Mankiw, Principles of EconomicsMonday, 28 January, 13
  5. 5. Absolute advantage “ The producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.” – N. Gregory Mankiw, Principles of Economics So...a business with an absolute advantage is just better – more efficient – at producing that product than anyone elseMonday, 28 January, 13
  6. 6. Comparative advantage “ The producer who gives up less of other goods to produce [a particular good] has the smaller opportunity cost of producing [that particular good] and is said to have a comparative advantage in producing it.” – N. Gregory Mankiw, Principles of EconomicsMonday, 28 January, 13
  7. 7. Comparative advantage “ The producer who gives up less of other goods to produce [a particular good] has the smaller opportunity cost of producing [that particular good] and is said to have a comparative advantage in producing it.” – N. Gregory Mankiw, Principles of Economics So...even a business with an absolute advantage in making a product might choose to make something else that will earn them more moneyMonday, 28 January, 13
  8. 8. Comparative advantage: example Amount of time required to make: Alice Fred Surfboard 200 hours 300 hours Water skis 100 hours 120 hours Who has the comparative advantage in making water skis?Monday, 28 January, 13
  9. 9. Supply & DemandMonday, 28 January, 13
  10. 10. Supply & Demand ✤ Demand is based on the Price value consumers attach to Supply goods & services as well as their income & substitute goods Market Price ✤ Supply is determined by suppliers’ costs Demand ✤ The market price is a Quantity summary of the supply & demand in the marketMonday, 28 January, 13
  11. 11. Supply & Demand ✤ Demand is based on the Price value consumers attach to Supply goods & services as well as their income & substitute New Price goods { Market Add’l Price Suppliers ✤ Supply is determined by New Demand suppliers’ costs Demand ✤ The market price is a Quantity summary of the supply & demand in the marketMonday, 28 January, 13
  12. 12. What kind of product is this? Price Supply Market Price Demand QuantityMonday, 28 January, 13
  13. 13. What kind of product is this? Price Supply New Price Market Price Demand Q1 QuantityMonday, 28 January, 13
  14. 14. What kind of product is this? Price Supply Market Price Demand Q1 QuantityMonday, 28 January, 13
  15. 15. What kind of product is this? Price Supply Market Price New Price Demand Q1 Quantity Q2Monday, 28 January, 13
  16. 16. Government Policy: Rent control Price Supply Market Price Demand QuantityMonday, 28 January, 13
  17. 17. Government Policy: Rent control Price Supply Market Price Mandated Price { Supply Gap Demand Quantity Quantity Quantity Supplied DemandedMonday, 28 January, 13
  18. 18. Writing assignment 1 Eddie Bimonte, a New York City dog walker, earns around US$50,000 per year. Registered nurses in New York, with two to three years of training, make an average of US$47,742. Your assignment for next week is to explain, in no more than 500 words, why you think Eddie makes more money than the average nurse. Start by thinking like a journalist: think about what Eddie’s job actually involves, who his clients are, and how he does his job. Then try and explain this situation using the concepts weve discussed so far in class.Monday, 28 January, 13
  19. 19. Assessment of writing assignments ✤ Application of economic ✤ Sourcing concepts ✤ Authoritative & relevant ✤ Relevant concepts cited ✤ Clearly & fully cited ✤ Explained clearly ✤ Sufficient number of sources ✤ Applied correctly ✤ Style ✤ Argument ✤ Concise ✤ Convincing ✤ Engaging narrative ✤ Logical ✤ Proper grammar/spelling ✤ ThoroughMonday, 28 January, 13

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