020811 econ market failures 100m

DRAW A LINE SEPARATING TODAY & YESTERDAY1) Write: Date: 02/08/11, Topic: Market Failures2) Next line, write “Opener #19” and then:

1) Write 1 high+1 low in last 24 hours2) Rate your understanding of yesterday: lost<1-5>too easy (3 is perfect)

3) Respond to the Opening Clip by writing at least 1 sentences about:Your opinions/thoughts OR/ANDQuestions sparked by the clip OR/ANDSummary of the clip OR/ANDAnnouncements: None

Agenda1) When do markets fail?2) Tragedy of the Commons3) Monopolies

End Goal, you will be able to…1) How do we contribute to market failure?

Reminder1) Find & complete your 4 news pods

Quiz (10 Points)1) Clear desk of everything except a

writing tool2) When done, turn quiz face down.

3) Circle just the dots.

4) Quiz # 1

Review1) Market Failure: When free market doesn’t provide

needed goods/services OR when free market hurts ppl

2) Premiums (when market works): If something causes the supplier extra hardship OR customer extra benefit, they will build it into the price.

3) Externalities: Cost (hardships OR benefits) that are not calculated into the price. (Often means the effected are not part of the initial transaction)

a) Negative Externality: Pll face hardship without being compensated. Example: Pollution

b) Positive Externality: Ppl benefit without paying

Review:Suppliers only care about their own cost.

Customers don’t pay when they don’t have to.

So the MARKET FAILS to take care of externalities.

Notes 19a, Title: “Market Failures” 1) Public Good: Goods that are hard to

exclude people who won’t pay (or we chose not to exclude). We all benefit, but someone has to pay, gov offers, it can force taxes

Exp: National defense, clean environment, roads, public radio.

a) Free Rider: The person who benefits but doesn’t pay (p. goods not run by gov prone to market failure)

Notes 19a, Title: “Market Failures” b) Tragedy of the Commons: Belongs to no

one, so anyone can take without supporting/paying, leading to market failure

Journ #19a, Title “Case Study: Fisheries”

1) With your group, come with a way to stop the market failure in the firsheries.

Prize for the best idea.

Review:If ppl don’t pay, the service can’t be maintained,

gov has powers to collect money in ways private business doesn’t (taxes).

Or else the MARKET FAILS because of free riders.

2) Basic Research: Science research that benefits society, but aren’t directly profitable (or best left free)

Exp: NASA, Particle Accelerator, Human Genome Project, Stem Cell Research.

MEDICINE RESEARCH=PROFITSDISCOVERING HOW YOUR BODY

WORKS = NO DIRECT PROFITS

NASA Clip

Journ #19b, “Space Exploration Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Cut NASA1) 17 billion is better spend on problems on Earth

2) Whatever benefits NASA does run across, it can be discovered cheaper in other ways

PRO: Keep NASA’s 17 bil budget1) NASA discoveries do have benefits here on Earth

2) Price can be put on human curiosity and mankind's need to explore

Stem Cell Clip

Journ #19c, “Stem Cell Research Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Leave to Private Funding1) Private money doesn’t raise taxes and is used more efficiently

2) Desire for profits is the most powerful incentive to bring about progress

PRO: Gov Fund Stem Cell Research1) Gov can raise money faster to help more ppl

2) Knowledge of the working of the human body belongs to all, and shouldn’t be package/sold

Notes #19c, Title: “Market Failures” 3) Oligopolies: Few companies (suppliers)

control most the market. More pricey to start biz. Exp: airlines & cars.

4) Price Fixing: If they work together (collusion) to set prices, they can force buyers to pay their prices. Illegal.

Notes #19b, Title: “Market Failures” 5) Anti-trust laws: Gov power to force biz

to break up if they have no competition

Journ #19d, “Monopoly-Antitrust Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

CON: Leave monopolies alone1) Customers have rewarded that biz with their business, can choose to stop supporting

2) Breaking them up is punishing their success

PRO: Break up monopolies1) When biz get that big, they can kill rivals who are esp vulnerable as new companies

2) With no competition, biz can charge whatever, and have no reason to innovate

Journ #19e, Title “Case Study: Microsoft”

1) Copy Source Title: CNBC

2…) Discuss questions on the board with a partner. Summarize your discussion (include their name at the end). Remember participation points are deducted if off task. 5 Reading/Film Qs Come From These Work SectionsTime Bookmark: 00:00

Project RolesPick a new role which you will be for all in-class project this week (leader will complete envelope and peers will complete slips at the end of the week).a) Leader: Executes the instructions, maintains morale through compliments, maximizes everyone’s contribution, and holds a larger responsibility for the task (Fills out project sheet, +- 1 EC point).

b) Presenter: Presents work to the class.c) Designer: Designs/records the work.d) Logistics: Leads the research to make sure the plan is educationally/factually. Cares for any materials/equipment.

Role for this week.

Issues to deal with:Spin off Office and/or Exp?Remove Exp from Window?Open code to competitors to

make their programs run smoother on Wind?

How to balance competition & product innovation & quality?

Journal #19e, Title “Monopoly Project 1”

You are the Department of Justice, develop a plan for Microsoft.

1) Write down a summary of your plan.

Group DeliverableReady to present step

by step action plan!

Issues to deal with:Will NBC shows be available toComcast rivals (internet, Time)How to ensure that ppl still have

choices in their cable/internet and choice of show producers

Journal #19f, Title “Monopoly Project 2”

You are the Department of Justice, develop a plan for Comcast.

1) Write down a summary of your plan.

Be ready to present.

Journal #19g, Title “Monopoly Project 3”

You are the Department of Justice, develop a plan for Facebook.

1) Write down a summary of your plan.

Be ready present.

Issues to deal with:How to guarantee privacy when

users’ internet data is under the control of one company

How to ensure diversity of contentHow can startups compete for

advertiser dollars

Fill out your peer evaluation sheet.The total of all your people must add up to 10.

For Example:If you give Al a 7, you only have 3 left to allocate for the rest of the group.

Fold + turn in.

Homework: 1) Study today’s notes + journal

sections for a possible journal quiz.2) Pick and listen to your 4 news

podcast by next Monday.

Journal Check: If your name is called, drop off your journal with Mr. Chiang (if requested, points lost if your journal is not turned in)