Archive for March, 2012

List of Definitions for Section 2

1. Market is a place where the consumers and the suppliers meet together. Here, the resources are allocated through the price mechanism. The price and the quantity demanded are determined by the equilibrium price. However, a market does not need to be a physical place where people meet face-to-face. Online shopping is one example of how the market is formed without requiring the consumers and the suppliers to meet face-to-face.

2. Structure of Market in the spectrum of competition

  • Perfect Competition occurs where there are many competitors who produce the same product and the market sets the price.
  • Monopoly occurs when there is only one supplier for the market. These monopolists set the price and profits very highly. They may set as many barriers as they can to stop other possible competitors from entering the market they are in control of.
  • Monopolistic Competition occurs when the market has both the characteristics of perfect competition and monopoly.
  • Oligopoly occurs when there are just few competitors in the market. However, they have interdependence to each other. Also, they may spend a lot of money on advertisement and promotion.

Summary of market types

Type of Market

Number of Firms

Freedom of Entry

Nature of Product

Examples

Demand Curve for Firms

Perfect competition

Many

Unrestricted

Homogenous

(undifferentiated)

Cabbages

Carrots

Horizontal

the firm is a price-taker

Monopolistic competition

Many, Several

Unrestricted

Differentiated

Plumbers

Restaurants

Downward sloping, relatively elastic, some control over price

Oligopoly

Few

Restricted

Undifferentiated or Differentiated

Cement

Cars

Kinked

Monopoly

One

Restricted or Completely blocked

Unique

Local water companies

Downward sloping, inelastic, considerable control over pric

Table Obtained from Triple A Text

3. Demand is defined as ‘that quantity of a good or service that would be bought at each and every price over a period of time’. Must include these three factors:

  • The desire for a product
  • A willingness to pay for it
  • The ability to pay for it

4. Supply is defined as the quantity of goods and services that will be supplied to the market at various prices over a given period of time. These are some of the determinants of supply:

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China on Equity vs. Efficiency

Should China slow down and focus more on Equality rather than Efficiency?

The Economist: News Article

As the gap between the rich and the poor increases substantially, China’s prime minister, Wen Jiabao, has ordered the new upcoming president, Xi Jinping, to “satisfy the people” by focusing more on the equality. Wen Jiabao has set a low target of 7.5% growth rate for Xi Jinping in order to slow down the overheated economy, lower the inflation rate, and focus more on dividing the economic pie equally for the people.

This old debate about whether an economy should focus on equality or efficiency is a ever-real problem for China as its economy is growing at double-digit growth rate, however, the gap between the rich and the poor has widen. This gap stirs the conflict between the people and the government as they get upset about the problem. There has been outburst of unrest in many parts of China in relation to the low income and the ever-increasing inflation rate.

Therefore, this political situation has forced the Chinese government to focus more on the equality. Otherwise, the government will soon lose the support from people and authority, which will result in the demise of the communist China.

I think that the Chinese officials are well aware of the trade-off of focusing more on equality. The economy will soon lose the efficiency once it had and the economic pie will shrink, instead of increasing. Surely the officials will be able to slice the pie more equally for the poor, however, this will act as a disincentive for the rich to work hard, which lead to the shrinkage of the economic size. In short term, the poor experience the prosperity from equality. However, in the long run, “The poor will get poorer and the rich will get less rich,” which is a quote by Margaret Thatcher.

This is a video of Magaret Thatcher commenting on socialist policies and how everyone will be hurt by focusing on equality.

China’s GDP per capita is only $8,394 according to the recent data from IMF (2011). Its GDP might be the second biggest in the world, however, there are too many people, which decreases the GDP per capita. UK’s GDP per capita was absolutely higher than China’s around 1990, and they were still arguing about equality verses efficiency. UK led by Margaret Thatcher focused more on efficiency. China will almost certainly decrease its economic pie if Xi Jinping focuses on equality. If I were at the decision-making position, I would certainly have focused more on efficiency. I would focus on equality later when the GDP per capita is high enough.

I understand that China has to satisfy and relieve complaints from their people to sustain political power. I am also aware that the government is focusing on slowing down the economy at an appropriate level. However, if the economy loses its economic momentum from socialist policies, the chance that China will become a developed country will decrease substantially.

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All-iPad Classroom, Is it educational?

An interactive textbook running on iPad

Oregon Live: News Article

The success of iPad and other tablet PCs has brought about the prospect of a classroom with interactive tablet textbooks. As soon as Steve Jobs introduced an iPad, everyone went frenzy about how it will ‘reshape the future’ of every aspect of our lives. It is true that Apple’s innovation has brought about changes in our daily life. For example, now nearly everyone has a smartphone and it has led to a huge success in social networking services and etc. Therefore, it is valid to expect for some changes in educational environment.

The educational market for digital, interactive, tablet textbooks will certainly be a big market for many electronics companies such as Apple or Samsung. Many schools, especially international schools, are looking forward to invest a lot of money in IT concerning their students’ education. Also, if a school buys a product from one company, it is highly likely that the school will continue to buy the same product from the same company. This is what Apple has been doing for years. Apple affiliated with school teachers and sold their products with discounted prices. This strategy has proven valid for Apple. Now, many students have apple laptops and it is likely that they’ll stick to it for years. For the same reason, many electronics companies making tablet PCs are keeping their eye on this new arising market for interactive tablet-textbooks.

It will certainly be a big market for many electronics companies, however, is it for the best for the students? Is it really educational? In my opinion, I don’t think this is the case.

Of course, these tablet textbooks have some benefits. It’s light, and you don’t have to carry all those heavy textbooks. Along with that it is interactive in a sense that you could actively apply what you have learned through internet.

However, all these benefits are in vain if the students do not have self-control over their tablets. In most cases, students will likely to be playing Angry Birds or some racing games on a tablet rather than studying from it. I’ve had experience with laptop classroom environment, and most of the time, many of my friends were on Facebook. If students keep playing games or chatting on Facebook, these tablet textbooks will be a waste of money and time.

In addition, I have read from some news articles that giving tablets to children under age of five will inhibit their psychological development, as well as their linguistic skills. It is just a form of a high-tech bad parenting that will spoil your kid.

In conclusion, I do not think the tablet textbooks will be educational for most of the students unless they learn how to gain self-control over them. However, I do think that for responsible students, this will be a great resource for his or her education. It is kind of like a double-edged sword that could be either beneficial or detrimental.

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