Post Lesson 8 Continued:
For next time: Read BE 95-98 & one section from 98-112. I also want you to reflect on a very basic question in your journals: what are the things that can cause a change in price? what are the effects on demand? on supply? what do the different reasons for the changes in prices mean for you?
Today we focused exclusively on our quiz as a review of Block A.I specifically focusing on the role of prices in the economy and how supply and demand is useful to us in understanding the role of prices. Remember that prices too are affected by our principles...in fact prices merely reflect the reality of economics (the 7 principles) and CONVEY INFORMATION.
Your reading for today talked about the role of profits and losses, which we touched on briefly. Profits and losses like prices, convey information to businesses about their practices. We also discussed briefly the need for competition for prices to work...this is true also in applying economics to businesses and we'll begin to think, in this block, about what happens when prices (or profits/losses) fail to do their "job" and what choices we have to alleviate problems that might arise.
Your reading for next time discusses what happens when the world changes around a business and what happens if the business fails to adapt. We'll hopefully circle back on this and your previous reading!
- A shortage or surplus can signal that prices aren't where they ought to be and can tell a supplier that they need to produce more/less and raise/lower prices to cover their marginal cost of producing the next unit. This is like the SUBARU example. Increased prices can actually be good because they encourage suppliers to provide more of the product you desire.
- If the above is true it should be true for any situation. Messing with prices (lowering them) is not the right way to get goods (that are perhaps desperately needed) to the area that needs them. Despite the rightful desire to care for the poor, failing to encourage business by denying them the incentives (higher prices) to move products to their best use (area after hurricane) will only lead to further shortages and other issues.
For next time: Read BE 95-98 & one section from 98-112. I also want you to reflect on a very basic question in your journals: what are the things that can cause a change in price? what are the effects on demand? on supply? what do the different reasons for the changes in prices mean for you?
Today we focused exclusively on our quiz as a review of Block A.I specifically focusing on the role of prices in the economy and how supply and demand is useful to us in understanding the role of prices. Remember that prices too are affected by our principles...in fact prices merely reflect the reality of economics (the 7 principles) and CONVEY INFORMATION.
Your reading for today talked about the role of profits and losses, which we touched on briefly. Profits and losses like prices, convey information to businesses about their practices. We also discussed briefly the need for competition for prices to work...this is true also in applying economics to businesses and we'll begin to think, in this block, about what happens when prices (or profits/losses) fail to do their "job" and what choices we have to alleviate problems that might arise.
Your reading for next time discusses what happens when the world changes around a business and what happens if the business fails to adapt. We'll hopefully circle back on this and your previous reading!
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