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Econ 101

by: Ian Notetaker

Econ 101 Econ 101

Ian Notetaker

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Essays 1-4
Macro Economics
Alejandro Prera
Study Guide
Microeconomic, Dr.Autor, whiskey-rebellion, Foreign, Exchange
50 ?




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This 12 page Study Guide was uploaded by Ian Notetaker on Tuesday October 18, 2016. The Study Guide belongs to Econ 101 at Washington State University taught by Alejandro Prera in Spring 2016. Since its upload, it has received 3 views. For similar materials see Macro Economics in Economics at Washington State University.


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Date Created: 10/18/16
Ian Schirato Dr. Prera 101.1 Writing Assignment 3 A monopoly is a made by the government when a temporary patent is given to an  inventor for use or sale of an invention. A monopoly then will by law have a good with no close  substitutes making the demand of a good produced by a monopolist more elastic than if the good  was mass produced. This achieved market power given to a product from a patents barrier to  entry preventing other industries to compete with the prices of a monopoly means the implicit  cost may not actually equal the price of the patent good because that price can be set very high  by monopolist due to a highly elastic demand compared to a market with competition. So a  monopolist can profit largely from his patented product setting the price high above equilibrium. In a market such as pharmaceuticals for example, when a patent runs out companies have  opportunity to make generic alternatives. This is not supported by pharmaceutical producers  because they want their product to stay inferior so prices will be held above what they should be. Once a patent reaches the end of its contract big monopolies try to extend the copyright through  a reverse payment a form of pay­for­delay. Monopolies can afford to pay generics to not sell  their product more than the competitors would make entering the market this is usually down out of court and is how companies extend their copyright. This Quantity effect is unfair to the  consumer with these buyouts from large firms who benefit largely. If the market was allowed to  compete from introducing generic companies the price effect on more quantity would allow  consumers to pay less instead of the producer profiting heavily from not having a quantity  supplied to effect the price. I believe that the pay­for­delay tactics are unethically done by firms. When a monopoly is made around an inferior cure to some disease companies should not be allowed to charge a heavy price unfair to consumers just because they can’t live without it. Our government spends  astronomical amounts on healthcare that could be lowered largely if the price of prescriptions  wasn’t so high. Price regulation must be changed in healthcare legislation big firms should not  have as much power to charge such high prices. In the United States we already pay almost twice as what other countries do for drugs this needs to be regulated by allowing competition of  generic companies and making a firm show price discrimination that is realistic. To me this  would look like a price that isn’t ninety percent higher than the price a generic is willing to  accept. The price we pay should be pay should be equitable to the consumer and producer not  blown up way above a price that is interdependent on the actual value of a cure and not the price  someone paid to copyright the cure. Ian Schirato Dr. Prera Econ 101.1 Writing Assignment 2 The Revolutionary War was an extreme hardship fiscally for the United States. When  ratification occurred in 1788 it caused about 54 million dollars of debt national. Even at a state  level there was a large amount of debt which was approximately 25 million, (Whiskey Rebellion  Video). At the time Alexander Hamilton wanted to consolidate the debt. So to create revenue to  fund the debt he issued bonds. The debt paid tariffs. This was done by the excises tax. Which  taxes a good made in the country, as a luxury tax. The Whiskey Act was created in 1791, and  was the first tax levy in the United State, (Whiskey Rebellion Video). However, I don’t not  believe this tax was justified under benefits principle. The benefit was for U.S independence, but  the tax was forcing the citizens to suffer for economic benefits. Benefit principles are those who  benefit from public spending should bear the burden of the tax for that spending. Those with  greater ability to pay should pay more tax. This would be idealistic, but this was not the case for  this act. The act did not account for the large population of Backwoods Appalachian citizens who used whiskey as a currency. The tax gave them extreme economic hardships, and many of them  refused to pay, as whiskey was the only way they could afford other goods.                Due to the economic hardships placed on the whiskey producers many of them  revolted. Frontier farmers were rebellious as whiskey was their main source of income. They  were inelastic, unlike other producers. Unfair taxation of smaller producers left them struggling.  They were taxed nine cents a gallon, while large industrious producers like distilleries were only  being taxed six cents per gallon. Whiskey was essential for the Appalachians, as it was the  lifeblood for their economy, as it was used for cheaper travel.  This is why the revolt occurred.  The large producers were elastic when it came to whiskey, while smaller producers were  inelastic. If demand is elastic it can be very responsive to the changes in prices, this made the tax acceptable to the distilleries. While inelastic demand is not responsive, so it was harder on the  small producers, as they could not make a profit off of the whiskey. So this is why the revolt  occurred immediately afterwards. Eventually the tax was repealed in 1800 by Jefferson, due to  the bad response, (Whiskey Rebellion Video). In the end the rebellion won, as they did not have  another luxury tax until the civil war. If the government wanted to avoid such impacts they could of choose to have a tax on a market that is more elastic instead of the inelastic farmers who  needed whiskey to live. Ian Schirato Dr. Prera EconS 101.01 Writing assignment 1 After reading David H. Autor’s analysis I say the author would choose proposition two as a bigger problem because of the facts, rich status can be ascribed and self-perpetuated for little change due to a lack of poor people representation in legislation likewise lazy people aren’t falling behind because they are lazy just don’t want to learn or don’t have the option to making proposition one a false statement. Proposition one is only slightly true but Dr. Autor thinks that it is not the determinant of one’s salary although effort and wage earned have a positive relationship the poor are at the worse end of things to begin with. Published in the American Association for the Advancement of Science, peer reviewed Journal, Dr. Autor, states, that “…prosperous democratic countries have numerous effective policy levers for shaping inequality’s trajectory and socioeconomic consequences.” Like most democracy’s we use legislation to control wage discrepancies such as fiscal taxes and monetary changes which based on in large to elites decisions elite theory would show very conservative and usually not in the favor of the poor people’s law making. I learned from Dr. Autor’s explanation the major causes of inequality that can be measured by one’s skill premium. The manipulation of the supply and demand of one’s intellectual capital in the job market for skills and jobs can, greatly affect how much money they make. Dr. Autor would agree with proposition one in only the positive relationship between education and earnings. “Indeed, two of the strongest predictors of children’s ultimate [Type here] [Type here] [Type here] educational attainment are parental education and parental earnings...” . There is more effecting those at the bottom end of the socioeconomic spectrum besides laziness depending on your parent’s education and money in turn is your education and future. The poor now make it harder for their successors and this self-inflicted gap of the rich and poor won’t go away because people are content and because people don’t care so in this since proposition one is true. This is the only consistency with proposition one. But the people who are poor and uneducated could be that way because of their lack of funds to meet the steeply increasing cost of education or many other variables besides laziness. The second proposition is very truthful in that the rich get richer from fellow elites who work on the policy put into law. It is true that there is less tax on equities then there is on income one of many forms of fiscal policy with lower percentage paid compared to those of a lesser salary this progressive form of tax is problematic and why the wage gap is so high. It is un-debatable that we need more fair pro tax policies, decent minimum wages, better public schools, aid to low-income college students, and a universal health care system. A workers earnings are dependent on productivity. Productivity in turn is dependent upon two factors capability of a workers skill to accomplish tasks. Secondly the scarcity of that skill premium, skill premium being skills of the workers, depends on two factors skills employers require known as skill demand and skills workers have acquired is skill supply. Both factors determine economic value of skill premium that person is capable of. In a market economy it is necessary for betterment of itself to have inequality in order to make incentives to have a struggle for skills and higher wages. The rising real earnings of college graduates comes with the price of less real earnings for those who don’t have post-secondary schooling. The United States of America has seen a rapid growth in globalization making production workers employment drop substantially from out sourcing along with their wages and demand for those high school [Type here] [Type here] [Type here] jobs being out-sourced to different places. A result of out-sourcing whole sectors of employment in a sector labor union members have fallen within their pro-poor legislation interests groups by 1 over 70% in the past 40 years. Making it harder for the poor and conquering with proposition two’s claims. By the 20 century increases in innovations have shrunk the demand for physical labor the drop seen from machine substitution as well as advances in computer technology this contrarily showed a big jump in demand for post-secondary education. The main factor for income inequality was the slowdown in acquired skills by young adults this skill premium has seen an explosive rise in demand since the 1980’s until a level out seen after 2005 a consequence of quick pace education achievement, in other words people getting with the times and accepting a college degree as a standard. Between years 1965 and 2008 the net value of a college degree in return investment compared to a high school diploma has tripled. The consequences in inequality can be seen among the bottom 99% of people. A rich person who has worked hard can buy success for their children through investment and connections. Vice versa when a poor person can only use government handouts or high interest rate loans in order to gain returns on their skills making the two classes very segregated this problem is self-perpetuated. A workers earnings are dependent on productivity. Productivity in turn is dependent upon two factors capability of a workers skill to accomplish tasks. Secondly the scarcity of that skill premium, skill premium being skills of the workers, depends on two factors skills employers require known as skill demand and skills workers have acquired is skill supply. Both factors determine economic value of skill premium that person is capable of. If a person is lazy they may not be educated this could prove proposition one to be slightly true but is not the only cause policy has a bigger factor. In a market economy it is necessary for betterment of itself to have [Type here] [Type here] [Type here] inequality in order to make incentives to have a struggle for skills and higher wages. The rising real earnings of college graduates comes with the price of less real earnings for those who don’t have post-secondary schooling. The United States of America has seen a rapid growth in globalization making production workers employment drop substantially from out sourcing along with their wages and demand for those high school jobs being out-sourced to different places. A result of out-sourcing whole sectors of employment in a sector labor union members 1 have fallen within their pro-poor legislation interests groups by over 70% in the past 40 years. Making it harder for the poor and conquering with proposition two’s claims. I do, and always have believed that incomes of the rich are so unequitable because of their education. But in reading I have discovered that the effects of high skills in demand may not be the sole contributor. Even after the Wall Street hefty tax breaks. The government might be more of an orchestrator then some who blame the lazy like to think. 1 Autor, David. "Skills, Education, and the Rise of Earnings Inequality among the “other 99 Percent”." Science 344, (2014): 843-51. [Type here] [Type here] [Type here] Ian Schirato Dr. Prera Econ 101.1 Writing Assignment 2 The Revolutionary War was an extreme hardship fiscally on United States. When ratification occurred in 1788 it caused about 54 million dollars of debt national. Even at a state level there was a large amount of debt which was approximately 25 million, (Whiskey Rebellion Video). At the time Alexander Hamilton wanted to consolidate the debt. So to create revenue to fund the debt he issued bonds. The debt paid tariffs. This was done by the excises tax. Which taxes a good made in the country, as a luxury tax. The Whiskey Act was created in 1791, and was the first tax levy in the United State, (Whiskey Rebellion Video). However, I don’t not believe this tax was justified under benefits principle. The benefit was for U.S independence, but the tax was forcing the citizens to suffer for economic benefits. Benefit principles are those who benefit from public spending should bear the burden of the tax for that spending. Those with greater ability to pay should pay more tax. This would be idealistic, but this was not the case for this act. The act did not account for the large population of Backwoods Appalachian citizens who used whiskey as a currency. The tax gave them extreme economic hardships, and many of them refused to pay, as whiskey was the only way they could afford other goods. Due to the economic hardships placed on the whiskey producers many of them revolted. Frontier farmers were rebellious as whiskey was their main source of income. They were inelastic, unlike other producers. Unfair taxation of smaller producers left them struggling. They were taxed nine cents a gallon, while large industrious producers like distilleries were only being taxed six cents per gallon. Whiskey was essential for the Appalachians, as it was the lifeblood for their economy, as it was used for cheaper travel. This is why the revolt occurred. The large producers were elastic when it came to whiskey, while smaller producers were inelastic. If demand is elastic it can be very responsive to the changes in prices, this made the tax acceptable to the distilleries. While inelastic demand is not responsive, so it was harder on the small producers, as they could not make a profit off of the whiskey. So this is why the revolt occurred immediately afterwards. Eventually the tax was repealed in 1800 by Jefferson, due to the bad response, (Whiskey Rebellion Video). In the end the rebellion won, as they did not have another luxury tax until the civil war. If the government wanted to avoid such impacts they could of choose to have a tax on a market that is more elastic instead of the inelastic farmers who needed whiskey to live. Ian Schirato Dr. Prera EconS 101.01 Writing Assignment 4 Common Pool resources are goods that are non­excludable to the public this means that  no single entity or supplier can prevent people who pay for the good from access to it. Common  pool resources are rivals in consumption meaning that if an amount of units is consumed by one  person the same amount of units can’t be consumed by another individual.  The tragedy of  common goods is that because goods are unmonitored in that they are non­excludable people’s  self­interests manifest since no one person is willing to pay more to supply a resource even  though consumers can consume more. This unknown of who will pay the price for common  resources is hard to delegate, problems that can occur are that people free ride and don’t pay the  price for their consumption this can cause market economies to produce inefficiently low  production while not having to pay for the opportunity cost of the rival consumption resources  become over consumed and scarce.  The problem with common resources is that they become depleted from over use when  one depletes common goods limiting the quantity for others to access without taking cost of the  use of such goods in consideration to consumption. This is why economist refer to this negative  externality as, “Good for me, good for you, and bad for us.” Reason being is that I can graze  more sheep on my field and so can you but if we share this field as an open grazed common pool resource the added amount of sheep by both of us could wipe out all the food from the parcel.  This would be good for me and good for you by having more sheep but bad for us because the  field’s grass the common resource is no longer productive. A way to help this problem would be  to split the land by assigning property rights to each individual herder this way the owner now  has land that is excludible. This solves the problem by removing the marginal social cost and  adding to the owners individual cost. Property rights stop overgrazing by making grazing’s  byproducts private goods.  Other problems with Common resources is fishery over harvesting in the ocean and the  pollution of the atmosphere the ocean has made. Every fish a fisherman catches is one less that  can be caught from rivals in consumption, society weighs this cost heavier than fisherman’s  marginal cost and benefit. Fish like albacore tuna are in danger from over fishing caused from  the industry being in a higher than normal price caused by a high social cost curve above the  efficient supply of fish caught. This problem has caused self­perpetuated high prices from  scarcity caused from more people who want to catch fish. To help solve the problem  governments can impose a quota using expensive tradable licenses to catch fish commercially.  This will keep prices high for fisherman and will allow the suppliers to internalize the negative  externality of catching fish so these set limits and seasons will reduce consumption. Atmosphere  is one of the biggest social problems today with worries of air pollution the biggest source can be accredited to increasing deforestation. Society has tried to mitigate the lumber industry by  enforcing conservation acts to protect old growths and to leave trees behind to make for new  habitat. The government has set rebates for companies who replant trees once they are harvested. This influences companies to stay accountable for their cost to society by cutting down trees that  worsens the atmosphere. 


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