Thursday, September 29, 2016

Found this on a Twitter account I follow---Restaurant News. (It has some great stuff for analyzing Microeconomic concepts from an industry students are very familiar with, one way or the other).

It is a menu board for a restaurant (as Restaurant News says) in 1969 and just the kind of thing that makes for a short economics lesson!

The price of a cup of coffee (does not say how many ounces it is) is 5 cents---a nickel.

Wednesday, September 28, 2016

Beef. It's what for dinner...before you run a half-marathon.

One of the Determinants of Demand is "a change in consumer tastes/preferences".  Advertisers and other advocacy groups try to promote their products in order to influence the buying decisions of consumers.

Here is an example from a Beef Industry lobbying group (from Morning Ag Clips):

The beef checkoff’s Northeast Beef Promotion Initiative in partnership with the South Dakota Beef Industry Council, the Pennsylvania Beef Council and the Kentucky Beef Council encouraged runners to “fuel up” with lean beef at the Rock ‘n’ Roll Philadelphia Half Marathon Health & Fitness Expo, Sept. 16-17.
Nearly 30,000 runners and their families toured the expo during the two-day event.  Visitors to the beef booth were challenged to test their beef knowledge through the ever-popular beef trivia spin wheel to win beef-related prizes. Attendees also learned the importance of fueling with high-quality protein through the checkoff’s Protein Challenge campaign. The checkoff’s Millennial-2-Millennial advocates and Team Beef members assisted checkoff by staffing the beef both.  After interacting with booth staff, an on-site event survey showed that 88 percent of attendees polled felt the positives of beef to outweigh the negatives.
- See more at:

Below I created some slides to show students how this plays out on the Demand side of a Market.

Hope it helps!

Monday, September 5, 2016

Determining Comparative Advantage the "Easy Way'.

One of the hardest concepts for students (and teachers!) in the beginning of an economics course is Comparative Advantage. Specifically, determining the Opportunity Costs and then figuring out which country has the Comparative Advantage in the production of a good.

I think the confusion lies in the requirement that we look at the Opportunity Costs of producing one good in terms of the other, i.e. "the Opportunity Cost of producing 1 bushel of Corn is .5 bushels of Wheat".

I believe I have a "fail-proof" method that shows students who are having a hard time with the concept how to get the right answer EVERY TIME.

The slides below represent the second step in the process of determining Comparative Advantage.  If you are not sure how these were established go HERE for that explanation.

I will do a follow-up to this presentation, using this example, to show how acceptable "Terms of Trade" are determined in order for trade to be advantageous to both parties.

Friday, September 2, 2016

Comparative Advantage using "OOO"---Output Other Over". A concise explanation...

I put together the following slides to give you a step by step understanding of how this concept works. It can be confusing, as you have already found out.  "IOU"---Input Other Under" is in the works and I will post that as well.

Comparative Advantage using "OOO"---Output Other Over". A concise explanation...

I put together the following slides to give you a step by step understanding of how this concept works. It can be confusing, as you have already found out.  "IOU"---Input Other Under" is in the works and I will post that as well.

Wednesday, August 24, 2016

Surplus Cheese and US Agricultural policy. Let's go to the graphs.

I don't see this surplus as a problem but an opportunity for more Queso dip!

The US government is buying 11 million pounds of cheese because no one else will
""There is way too much cheese in America, so the US Department of Agriculture is buying a massive amount of it. 
According to a release from the USDA, it will buy 11 million pounds — worth roughly $20 million by its estimate — and distribute it to food banks around the country."""
The US cheese market has had a significant oversupply problem for most of the year because foreign buyers have looked elsewhere for their dairy products as a result of the strong dollar. Before this slowdown in exports, many farmers had ramped up their production because of record-high prices."""
This situation presents another opportunity to "go to the graphs" to explain what is going on in the Market for Cheese.

Tuesday, August 23, 2016

"There is no profit in destruction***" said no media outlet ever. Louisiana Flood Edition...

***Frederic Bastiat.

Well, it has not happened yet, but wait for it...

Here is a satellite photo (from NYTimes) that shows "Louisiana at Night".  The bright white on the left shows the State as it normally is at night.  The one of the right shows it on August 15, 2016.

Notice the lack of electricity where it used to be plentiful?  Many areas have gone dark.  Devastation.

When damage is done to property, private or public, it has to be repaired or rebuilt. This will necessitate new/current purchases of goods and services.

This adds to Gross Domestic Product (GDP).  It looks like the economy is humming along.

But GDP accounting must include a subtraction to account for what was lost, right?  The added purchases are simply making us whole again, right?

Nope.  GDP includes only "new goods and services" purchased.

Now, businesses will sell less of some goods (demanded before the flood) and more of others (stuff to rebuild) so it could (not likely) come out even.

But you are likely to see a news report that suggests there is a "positive side" to this tragedy---employment and the buying of new stuff.  DON'T BE FOOLED!!

"""From which, by generalizing, we arrive at this unexpected conclusion: "Society loses the value of objects unnecessarily destroyed," and at this aphorism, which will make the hair of the protectionists stand on end: "To break, to destroy, to dissipate is not to encourage national employment," or more briefly: "Destruction is not profitable."""" Bastiat.

Wednesday, August 17, 2016

Market for Irish Cattle---Change in Quantity Supplied vs Change in Supply

One of the most frustrating things to teach AND learn in a basic microeconomics class is the difference between a change in Quantity Demanded and/or Supply and a change in Demand and/or Supply---whether we move along the respectived curve or the curve shifts entirely in one direction or the other.

This very short article from a website that reports on agricultural issues in Ireland provides a nice example on the supply side to illustrate the difference:
The number of prime cattle slaughtered at Department of Agriculture approved beef export plants has jumped 10% in the space of a week. 
Figures from the Department show that the throughput of young bulls, steers and heifers increased by just over 2,200 head last week compared to the week before. 
Towards the end of last week and into this week, factory buyers were willing to pay an extra 5c/kg on top of the base price in order to secure stock.And this move appears to have worked, as an additional 2,285 cattle were presented for slaughter during the week ending August 14.
Here are some slides that will help explain the difference. Hope it helps!

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