Best Economy in the World: Netherlands

For our project we compared the economies of the US, Sweden and the Netherlands.  We used stability, standard of living and innovation to decide which one has the best economy.

We divided the work by having each person work on 1 economical aspect. We each researched on our owns, then came together to pull all of the information together.  We worked well together, and I think we presented our ideas well, so I believe we did well on this project. I made the powerpoint, Abby made a video, and Kelly did a monologue.  It all came together nicely I think.

Here is the introduction video clip.

Response to Data Response

My data response test did not go as well as I had hoped.  While it was not horrible, it was not anywhere near greatness.  With this assessment, I need to review section 2 and hope to learn the information better than I did the first time.  I need to really study the diagrams more next time.  I feel as if I could have done a lot better.  Guess I just need to try harder next time…

Negative Externality Presentation

Link For Negative Externality Voice Thread:
http://voicethread.com/#u795049.b967758

Initiative: Whale Trainer death causes possible problems for Sea World

A whale trainer was killed in Seaworld during a live show.  Knowing that Seaworld is not as safe as it seems, people could stop wanting to go to the theme park.  This may cause a shift in the demand curve.  As shown in this graph.

As you can see, the new equilibrium point has a lower quantity supplied and supplied at a lower price.  This is obviously bad for Seaworld Business.  So, not only did someone lose their life in this tragic event, but the event might prove to be tragic for Seaworld’s business as well.

Litter on Suma Beach

In Japan, trash cans are hard to find.  This makes it hard for people to throw things away.  Usually though, in Japan that is not that big of a problem.  It becomes a problem when people take a day trip to the beach though.  When there is not a trash can on the beach, people just leave their trash.  So, because the Japanese government has not payed for trash cans, there is a litter problem on Suma Beach in Kobe, Japan.    This is an externality.

Schoolies Week ruins the day

Schoolies week in Australia has a huge negative externality.  Schoolies week occurs in Australia the week afterteenagers graduate high school.  They all go to the gold coast to party.  Some even die because of this.  There is a negative externality in this.  One, for the citizens who live on the gold coast, their town is invaded by a bunch of loud, rowdy teenagers.  This obviously is a negative effect, and it is an externality because the natives had nothing to do with the kids choosing the gold coast as their vacation spot.

Snob on a Bus

Snob on a Bus is a blog which describes the adventures of one lady who, because of the expensive lease on her car, decided to get rid of the car and ride the public transit system.  She made this switch for two reasons (1) become more green and (2) to save money.  The big question is : does she really save money?  Well, with the car, hers was a 2005 Volkswagen Jetta, there were certain costs.

Now, before we figure out what she was paying per month in expenses for using a car we should regonize the following: (a) the 2005 Jetta has 28 city miles/gallon. Our “snob” from the bus was living in LA, so we can assume she drove mostly in the city.  (b) The average American drives 15,000 miles per year.  (c) The average cost of gas in LA is US $3. (d) The average american pays $1837 per year, per car in car insurance.  And lastly, (e) the average maintenance costs for an american car are around US $200 per month.

Here is what she was paying:

1. Rent: US $250 per month.

2. Gas: roughly US $134 per month

3. Insurance: US $153 per month

4. Maintenance: US $200 per month

So….In total, that puts us at a whooping Us $737 per month just to pay the expenses of owning and using a car.  Turns out riding public transit costs you US $5 a day for unlimited bus rides for the Los Angeles Metro.  This equals about US $150 per month.  So, our “snob” saves US $587 per month.  Not only is our consumer saving money, but also helping out the environment, a positive externality in this case:)

Externalities

Externalities are “costs or benefits which are not reflected in the market price.”  They are sometimes refered to as by-products’, ‘spillover effects’, ‘neighbourhood effects’ ‘third-party effects’ or ‘side-effects’.  They are events or happenings that can affect a third party besides the producers and consumers.

Think of it like this: a cigarette addict goes broke.  In hopes of regaining some wealth, he stops cold turkey.  Now lets say this cigarette addict and you both ride the same train to work every morning.  Once he stops, the amount of second hand smoke that you consume goes down dramatically.  So, in this case, because the smoker stopped smoking, your chances of catching lung cancer drop dramatically. Because of an event that did not concern you at all, you were effected positively.  This is a positive externality.  This is shown in the graph to the right.

Now lets say stopping cold turkey didn’t turn out so good.  Monday morning rolls around and you see him on the train, cigarette and all.  Obviously, because he decided to purchase a pack of cigarettes from the local Family Mart, you are at a greater risk of catching lung cancer.  Although you were a complete third party in the exchange between the family mart worker and the smoker, you were effected negatively.  This is a negative externality.

Externalities can be both positive and negative, as shown in these examples. Either way, they are the results, the “by-products” if you may, of an exchange that  effects a complete third party.  The third party usually does not have any say at all in the matter–given you cannot control whether or not the smoker buys the pack from Family Mart.  What happens happens.  Either way, you are still effected.  Thus, an externality.

Price Discrimination

Put simply: price discrimination is when two people get charged different prices for the exact same product.   It like when you go to the movie theatre and your child only has to pay $5 while you are paying twice as much at $10.  This is a perfect example of price discrimination.  Price discrimination happens most often in a monopoly situation.  The Graph below demonstrates the difference between a normal monopoly economy and a price discriminating monopoly.

Price discrimination happens due a different demands.  It shows that the demand for two different groups of people is different.  There for, the equilibrium point is different for these two groups.  Thus, this cause two different prices.  There are many factors that cause price discrimination, such as age or gender.

Monopolistic Competition

Monopolistic Competition is “An industry [that] is…made up of a large number of small firms who produce goods which are only slightly different from that of all other sellers. It is similar to perfect competition with freedom of entry and exit for firms and any supernormal profits earned in the short-run will be competed away in the long-run as new firms enter the industry and compete away the profits.” (triple A).  The main properties of this type of economy are as follows:  a few large firms with many smaller firms; similar products with a varying factor that sets your product apart from the others; loyal consumers (i.e. someone may only drink coca-cola and not pepsi); independence, thus they do not have to worry about their rivals.  In our groups presentation, we will be using coffee as an example of a product that would thrive in this type of environment.  Coffee is an extremely normal product, but with just a little addition it becomes a product to which people become very loyal (i.e. Starbucks).  Many food companies and other brand name products thrive in these economies.