Supply

1. Describe a fixed cost and a variable cost?

    A fixed cost is independent of output. A variable cost is dependent of output.

   A fixed cost is where a company has to pay for the business expenses. For example a company has to pay rent and utility bills. It's expenses are not dependent on goods or services from the company or business. A variable cost is indirect costs. It changes with proportion or a relation to a company's business activity. Some examples of variable costs are packaging, energy costs, and raw materials. 

2. Discuss a supply factor that can lead to more expensives prices for taco villa?
 When the supply of a certain product for taco villa goes down due to the lack of labor or certain animals needed for that particular supply, that means the demand will go up as the supply is down. This will directly lead to the prices being more expensive for taco villa.

Demand

1. Bernie sells more hamburgers when they are priced at $1 than 5 because it is cheaper. People and consumer want to save money and spend less. The demand for the burgers is higher because the price is less, therefore it leads to more people buying more burgers as it is cheaper.

2. Bernie sells more hamburgers when they are priced at $5 than sally's salads at the same time, because people prefer it. This can be seen with preferences. The taste and quality of the Bernie's hamburgers is much better then the quality of sally's which leads consumers to buy Bernie's as it is in the favor of preferences for the average consumer.

3. A demand factor that can lead to more entree sales for both Bernie and Sally is if the economy was good and the income rate for people was high. This will allow consumers to spend more money on other products and pleasures such as food and restaurants pertaining to Bernie and Sally sales. Additionally if there were expectations that the economy would get better people will also be spending more money on products and businesses which will benefit Bernie's and Sally's sales.

Extra Credit: If demands is elastic and there was a raise in price on a particular good the total revenue would go down because there would be less consumers as the it is price sensitive. Meaning if the price is raised there would be less demand, which leads to a smaller total revenue. One factor that could affect  elasticity, can be price related good and competition which will lead to prices changing for different products. Most of all necessities can change elasticity as it is in demand and people need it.

Fiscal Cliff

     The fiscal cliff is a term used to describe a collection of momentous U.S. federal tax increases and spending cuts that are going to take affect at the end of 2012. In total the measures are going to slash the federal deficit by 503 billion dollars. 

       Their are many negative affects if failing to address the "fiscal Cliff". Some say we will hit a double dip recession and there will be a huge rise in unemployments . Additionally the financial market will suffer tremendous consequences. From the economic recession, fearful consumers will stop spending. Many will try to save money by buying less products. The recession will lead to lower income and will cause people to spend less. Consumers will spend less which will afect producers, businesses, and corporations. This will lead to businesses hiring less employees to save money. Additionally The "Bush tax cuts," will expire on December 31, 2012 which will raise all income tax rates (top will go from 35 to 39.6 percent), as well as the rates on estate and capital gains taxes. This will also give an incentive to spend less, hire less, and buy less products because taxes are being raised. The CBO anticipates that if no changed occur households and businesses will begin changing their spending because of the changes, possibly reducing the GDP before 2012 is even over.

    There are many proposed solutions to the problem of the "fiscal cliff". The U.S lawmakers have a couple of solutions to the fiscal cliff. They can let the current policy set for the beginning of 2013 that has a number of tax increases and spending cuts which is supposed to drive the economy back into a recession to go into effect. Fortunately there is a plus side as well.The deficit, as a percentage of GDP, would be cut in half. 

Another solution the Lawmakers have is they can cancel some or all of the scheduled tax increases and spending cuts, which would add to the deficit and increase the odds that the United States could face a crisis similar to that which is occurring in Europe. The flip side of this is that the United States debt will continue to grow.

Economic Inequality

      Many people argue that inequality exists in America and is a huge problem. Nick Hanauer states that an ordinary consumer is more of a job creator than a capitalist. He believes that business man do not create jobs as hiring people is a last resort for many. He believes that the middle class consumers are the real job creators and not the rich. Haunauer states that the income for wealthy Americans has tripled since 1980 and the effective tax rates have declined by close to 50%. He also states as capitalists and the rich have been getting richer over the years. The wages for the lower class has stagnated, while the costs have shot up tremendously in everyday expenses. (Ted, Job Creator). The idea that economic inequality exists in America has been supported by many others. More examples can be seen from charts and data from inequality.org. From statistics, the gap between the rich and everyone else has been growing rapidly. For example according to the real median household income graph the median income for american families in 2009 was 47,777 dollars. Half of the American families had income greater than this figure and the other half less. Additionally the current recession has hit many households hard and led to the median income for households to declined between 2007 and 2009. Incomes are now at there lowest point since 1997. As many middle and low class household's income have been decreasing the rich have been increasing rapidly. For example according to data from the CEO income, their salary has ran eight times the CEO average for all the decades in the mid 20 century. CEO's income is so immense that their average income is 263 times greater than the average income of an american worker. Economic inequality is a huge concern the modern america. Many argue that the rich are getting richer and the poor and the middle class are not functioning in a productive manner. This can be seen from a wide variety of things, such as the rescission, fact that wages are low, the cost of living has been rapidly increasing, and an inefficient tax system. As a result, there are many consequences that derive from economic inequality. 

    Some of the problems with economic inequality is that there is not a fair distribution of power in a society. The rich are more powerful and make decisions that affect lower income families. This can be seen when there is an unfair distribution of income for workers. The inequality arises from some  businesses having the power to set wage rates. Additionally social problems and unemployment is a problem in economic inequality. Social problems can be a factor in riots and an increase in crimes because of an unfair allocation of opportunities and wealth. While there are many cons. There are also many pros of inequality as well. For example, inequality is important as it gives entrepreneurs an incentive to take risks and make businesses. This is very similar for inequality for the poor. As many are motivated to make a lot of money and move up in the social ladder (lecture notes and in class activities).

    Many argue and have different Ideas on how economic inequality can be addressed. Nick Hanauer argues and strictly believes that the rich do not cause job creation but middle class consumers do. He believes that our policies and tax systems are upside down and are not benefiting the majority. He argues that one reason for economic inequality is that the rich are getting more benefits especially in taxes. The rich income has more than tripled since 1980 while the poor and the middle class have been continuously struggling. Nick believes that taxing the rich to make investments which will allow the middle class to grow and expand is the single most important thing we can do for all social levels.  (Ted Job Creator). Warren buffet also addresses inequality by his own but similar beliefs to Hanauer. He stated, because of the tax policies there is a huge benefit toward the very rich and not so much toward the lower and middle class. Buffet states that we have come to a taxation system that is too flat in America, and on several aspects of the tax system we should have a more progressive tax system. He believes that the rich should be taxed more (Warren Buffet). On the other hand Paul Ryan has a different view on how economic inequality can be addressed. He believes that wealth should not be evenly distributed. Ryan wants there to be less government control and more equal opportunity. Ryan's main view is to lower taxes on businesses and corporations. He believes this will create more jobs and decrease unemployment. Businesses will hire more people if their taxes are lower. (Paul Ryan).

how taxes chage incentives

  Taxes differ for everyone as people have different incomes. Taxes can easily change people's icentives in life pertaining to how much money they will spend and especially the topic regarding working. Weelan stated that high taxes discourage and reduce working especially pertaining to married would or second family earners. He said that if women make a dallor they have to pay 50 cents for taxes, which lowers their incentive to work. Weelan also gave other examples, that had to do with people leaving a certain country becuase the taxes were too high. For example Weelan described a famous tennis player from sweden. When the Swedish government taxed him in a very high rate his incentive was to move and change residency's to counter the high taxes, which he had done. An addition the government benefits pointed to help low income residents are actually diminishing their incentive to find work.Weelan also gave different examples pertaining to the income tax and gasoline tax that generate revenue. He stated that the income tax is a bad incentive to work as it will discourage people to work, while the gasoline tax will discourage people from using vehicles and deiving which is a good thing for the envirfement. lastly Weelan discussed the EITC program which can cause a huge incentive to work as it uses the icome tax system so workers income is changed above the minimun poverty line. This gives people a higher incentive to work in the labor work force and in higher paying jobs.

Extra Credit Blog: Economic concpts involved during Debate

During the debate between Obama and Romney several economic issues have been brought up such as Mitt Romney's plan such as energy and independence, opening up more trade opportunity, education and skills for success, get us to a balance budget, and champion small business.

Energy Independence is vital for America as right now because we are buying energy such as fuel from the Middle east. This causes gas prices to go up. If America has energy independence we can provide our own prices and create many more jobs. When we open up more trade opportunity we can maximize  our recourses and use it in our self-interest to make more money for the country and conserve important recourses. Education is vital to the US. as it gives students and young adults abilities to make our country better by making themselves useful, understanding our country's problems, and enchanting the united states Education system for the future generations.  Education is also important as it will increase the number of jobs and give people an incentive to work and creative new ideas. Balance budget is also very important to make a stable and reliable economy. Romney's views on medicare and taxes will balance the budget. He also wants to champion small businesses by reducing taxes on job creation, stop the increase on regulations that tangle job creators, and replace obama care with real health care. This is Romney's economic plan. This will increase more businesses that will increase jobs and help improve the economy.

Some of Obama's plans were similar to Romney's and some not, Obama's spending plan was to invest in education and training which will give is a new source of energy here in america.

Who Feed Paris?

In the book, the quote Who Feeds Paris can draw someones attention to what things are happening at an every day moment to make an economy work. For example restaurants have the exact food that their costumers want and the right amount of tools and recourses that make it to a store in need of it across the country. These all can include hundreds of millions, even billions of transactions. Living is more easily than before, life expectancy has climbed, and buying a tv is more easier than before. Trading and transactions are occurring everyday with or without the government.