Credit

This week in Econ class we have been learning all about credit. We have learned everything from what to look for in a credit card to how a credit score is configured. The most surprising thing that I learned this week is that there is good debt.  Good debt is when you cannot afford to pay for something you are in debt but you will gain money on it later on. A prime example of good debt is higher education. A lot of people cannot finance for college on their own and must take out a student loan. A student loan is similar to credit because you are using someone else's money to pay for something--in this case college-- and will pay them back with interest.  Higher education is good debt because a college degree will often get you a better, high paying job than you would get without the degree. In this way, you receive money on the debt of the student loans because in the long run you receive more money than you owe. The topic of financing higher education is a good topic for us to discuss as highschoolers preparing to go to college.

Net Neutrality 101

I read an article on www.savetheinternet.com called Net Neutrality 101. We briefly discussed this issue in class. Net neutrality is how we currently use the internet. We pay for the internet from our internet provider and are allowed to visit any website we want to while we are online. However this system is in danger.  The companies that provide us with internet access want to charge extra fees so that websites will load properly and so that online applications will work. This is the opposite of net neutrality which means open and free access to any websites and applications.  The internet providers want to the owners of certain websites more money in order to have their website operate properly. This fees will trickle down and affect us. If Verizon charges Netflix more money to provide service for the website, then Netflix will charge customers more to cover the cost. This is unfair. We already pay a lot to these companies for internet and other services we should not have to pay extra costs to use websites that should be offered to us for free.  The destruction of net neutrality will have damaging effects on the economy. Some internet based companies will go out of business and customers will be unhappy.

http://www.savetheinternet.com/net-neutrality-101

Banking

This week in economics we have learned all about banking. We received banking cards and opened checking accounts. We have a sheet where we record all of our withdrawals and deposits. We also learned how to write checks in order to pay bills. I think that this is really helpful. This way we will be prepared for what our future will soon be. Right now, we as students usually do not have to go to the bank often and usually are parents take care of the bills. By learning all of these money skills we will be prepared to live on our own and spend our money wisely. In today's world, many people do not know how to properly balance their check books and how to use money wisely. I think that is good that we are be taught how to be fiscally responsible.

Business Structures

This week in Economics class we learned about the different types of business structures. We learned about sole proprietorship, partnerships, and corporations. I believe that partnerships are the best type of business structures. Partnerships allow for specialization and offer more resources than sole proprietorship. Yet partnerships still have less government regulation and are easier to open than a corporation. Partnerships still have a lot of liability but a business with more than one owner is more likely to succeed than a business with one owner.  We still see many people try to open their own businesses and be sole proprietors. However, many of these businesses fail. We do not see many new corporations open. Partnerships open businesses often and they are more likely to succeed.

Competition

This week in economics we learned about the different forms of competition and business structures. I found the forms of competition pretty interesting. Perfect competition is the most competitive form. It has the most sellers, most freedom to enter and exit a market, the least amount of control of price, the most informed buyers, and standardized products. However, I don't believe that it is the best form of competition for most markets. I believe that most markets should have monopolistic competition. Monopolistic competition is similar to perfect competition because both have a lot of sellers, a lot of freedom to enter and exit a market, and little control of the price. Monopolistic competition however, has differentiated products. This means that producers make their products different from others so they can still make a profit. In perfect competition there is the same product offered by all and this means that the price will go down. The price will eventually drop so much that producers would not be making enough profit. Monopolistic competition still offers a lot of freedom to the buyers but it also has more benefit for the sellers as well.  The other forms of competition  are oligopoly and monopoly. They are less competitive and there are less sellers and the sellers have more control over the price. Competition is important in everyday economics because there are many of the forms present in the economy. All forms of competition have their benefits and disadvantages. The right type of competition has to be selected for the right market.

Supply

This week in Economics we learned about supply. Supply is the ability and the desire of the producer to sell a product. The law of supply says that when prices go down, quantity supplied goes down and when prices go up, quantity supplied goes up. Producers are motivated to increase supply by profit. They want to make more profit and so will supply more at a higher price. The supply curve is constantly sloping upwards unlike the demand curve. This is because producers want higher prices but consumers want lower prices. I think supply and demand are the main things that drive the economy. Consumers will demand more products at lower prices and producers will supply more products at higher prices. This relates to everyday life. Supply and demand constantly affect prices. Prices are either lowered or raised by the demand of consumers and the supply of producers.

Elasticity

This week in economics we continued learning about the relationship of price and quantity demanded. We further learned about elasticity of demand. We learned that you have to take the percentage change in quantity and divide it by the percentage change in price. Then if that number is less than one, the change is elastic. If it is greater than one it is elastic. We also learned of a few examples that represent elastic demand and inelastic demand. Insulin is inelastic because no matter the price the same amount of people who need it will buy it. Movie tickets are elastic. As the prices go up or down there is a big change in the amount of tickets sold. This is important to daily life. Many businesses look at elasticity to see how they should change their prices to yield the most revenue. They use the Total Revenue Test. They look at the quantity demanded at the original price and how much money was made and compare it to the quantity demanded at the new price and how much money was made. They then will choose the price that makes the most revenue.

Economic Demand

This week in Econ Class we learned all about demand. We learned about the law of demand, demand schedule, and demand curve. We learned that in order to have demand, you have to have the desire to buy something and the ability to purchase something. The law of demand states that as the price of an item goes up, the quantity of that item will go down. Similarly, as the price of an item goes down, the quantity of that item will go up. We did some demand curves and schedules to prove this. I think that this basic principle is true but I feel that it is much more complex than this.  There are many factors that can effect the demand of a product or service.  There are things like consumer expectations, substitute goods, consumer taste, and market size that affect the demand of an item. I believe that income would be the biggest factor to affect demand. The more income a person has, the more willing a person would be to buy a product at a higher price. Income to me seems the most influential. I think the more money you have the more quantity you will buy also. The principle of  demand still relates to everyday buying and selling. The rule stays to true to every product or service that is sold even into today's market.

The Free Enterprise System and Entitlement Programs

This week in Econ we learned about the American Free Enterprise System. We learned about the role the government plays in the economy, what makes a public good, taxes, and government spending.  We learned about the different types of government spending. There is mandatory spending which is required by law and discretionary spending which has to be approved each year. Mandatory spending makes up more than 50% of the government's spending.  Some things that fall under mandatory spending are entitlement programs. Entitlement programs are programs that are funded by our tax dollars to people who meet a certain requirement to receive them. Some examples of entitlement programs are medicare, medicaid, and social security. These are a big cost in the budget each year because there is a set amount that the government has to pay on them. I personally believe that the requirements to receive these entitlement programs and others like them should be revised and made more strict. These programs are putting to much strain on the budget. We have had a huge deficit with our budget for years. This is still relevant today because many people advocate that we get rid of social security, medicaid, and medicare all together. They do not realize how lengthy a process it would be to get rid off these programs or what damage it may cause. However, I do agree that these programs need some re-advisement.

Will Walmart Come to Town?

    This week in our econ class, we have been trying to decide whether or not Walmart will be able to open up in Weserville. Part of this decision included voting on what businesses would come to Weserville, writing a petition to Walmart, and holding a Town Hall meeting to discuss the decision about Walmart. We also watched a video about Walmart and how it affects small towns like Weserville. I think Walmart is beneficial in most towns. Ashland was the small town featured in the video. A lot of people in the town did not want the Walmart. They felt it would destroy the small businesses within their town much like the people of Weserville believe. However, I believe that Walmart is beneficial to the town in the long run. It would create more business and it helps employs many people. Even though the jobs do not have the best wages or conditions it offers jobs to people who would not be able to get a job elsewhere because they lack certain skills. Walmart is still a big issue for many people today. Many people are trying to bring back small town businesses in opposition to Walmart. Many people are trying to bring attention to the shortcomings of Walmart that need to be fixed. I think more action does need to be taken against Walmart in order for the business to improve. Walmart still is the largest employer and right now there is a rising unemployment rate. I think that Walmart would benefit any economy right now. The pros of Walmart outweighs the cons.

Obamacare

I read an article called Obamacare Sign-ups Jump to 3.3 Million by Tami Luhby on CNN Money from February 12, 2014. In the article she talks about how originally the estimated number of people to sign up in 2014 was 7 million but that it is only projected for 6 million now because the slew of difficulties with the website. She also gives an in-depth look at who it is that has signed up for Obamacare. About a quarter of the 3.3 million is people age 18-34 which is significantly lower than the 40% which was projected by the White House. It is important that younger people sign up because they tend to be healthier and would balance out the older and sicker people who enrolled. Obama’s administration has  increased its campaigning for enrollees and has geared their campaigns towards younger adults and minorities. I believe that Obamacare is a good idea because it tries to offer healthcare to those  who would not be able to get elsewhere. However, I believe that it goes against our free market economy and our democratic government. Obamacare is healthcare that  is run by the state. Before Obamacare, all healthcare was privatized.  In a free market economy businesses should be owned privately not by the government. Obamacare is healthcare owned by the government like it would be in a socialist or command economy.  The article addresses how 20% of the people signed up for the healthcare have not paid their premiums. The article also says how the majority of the people only bought the second tier insurance plan. This shows how most of the population cannot afford good healthcare. This raises questions about poverty in America. Many people are still without jobs and even those with jobs do not necessarily have healthcare. Obamacare seeks to provide everyone with a means to healthcare. 

Link to Article:

http://money.cnn.com/2014/02/12/news/economy/obamacare-exchanges/index.html?iid=SF_E_LN

Capitalism vs. Communism

This week in our personal finance and economics class, we learned about Karl Marx and Adam Smith. We learned about their viewpoints on how economies should be run. Karl Marx believed that social classes separated the poor from the rich and that the gap between the rich and poor would keep growing.  Marx believed that this would cause resentment in the lower class and cause the lower class to revolt. The social class system would be overthrown and everything would belong to the people. This means that the government would own everything and regulate everything. This would make everyone equal in the economy. Adam Smith believed in a free market economy. He believed that companies and businesses should control everything in the economy. He believed in laissez faire, which is that the government should have a very minimal role in the economy. He believed that the economy would regulate itself and be guided by "an invisible hand". He believed that a free market economy would create competition between producers and that this would force producers to make better goods and have better prices. Consumers would have the choice in what they want to buy, whom they want to buy from, and how much they are willing to spend. Individuals would always act in their own self interest. The economy would be balanced this way. I personally believe that Adam Smith's viewpoints are more correct. Overall throughout history, market economies work better than command economies. Countries with market economies tend to thrive better than countries with command economies. America for instance has a thriving economy with individually owned business that produce different goods. America has a market economy which creates more products and business than countries like North Korea that has a command economies. In recent years,  many countries have been switching from command economies to market economies. However, these countries still face many issues because of their past command economies. Russia is a prime example. The Sochi 2014 Winter Olympics begin February 6, 2014, but the Olympic City is not close to being ready or finish. Many of the hotels and buildings are not finished being built. You cannot drink the water from the city and the roads are not finished. This is due to the lack of funds that Russia has. They do not have the money or the manpower to finish the project and this is because their economy is still in transition.
Below is a link to an article about the problems in Sochi:  http://www.syracuse.com/news/index.ssf/2014/02/2014_winter_olympics_sochi_problems.html

Hey

Ani said "How was I supposed to know?".