011509 Econ Market Failures 50m

Good Day!

DRAW A LINE SEPARATING TODAY & YESTERDAY1) Write: Date: 01/15/10, Topic: Market Failures2) On the next line, write “Opener #7” and then:

1) Plot your mood, reflect in 1 sent.2) Respond to the opener by writing at least 2 sentences about:Your opinions/thoughts OR/AND

Questions sparked by the clip OR/AND

Summary of the clip OR/AND

Other things going on in the news.Announcements: NoneIntro Music: Untitled

Agenda1) When do markets fail?2) Public Goods3) Basic Research

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

Reminder1) Find & complete your 4 news pods

Work #7a, “Taxing Externalities (internalizing)”Ask your partner if we should place a tax or fee

on the following, and use that tax money to help those harmed (include their name):

1) Should we place a tax on crying sick children on planes to compensate those who sit near them?

2) Should we place a tax on those who throw away more trash than average?

3) Should we place a tax on ppl who live unhealthy lives to pay for their public health care services?

4) Should we place a tax on regular looking ppl to pay beautiful ppl for making regular ppl happy?

5) Should we place a tax on cans/bottles to give money to those who pick up cans/bottles?

(wait, we already do that)

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 #7a, Title: “Market Failures” 1) Public Good: Goods that are hard to

exclude people who won’t pay. We all benefit, but someone has to pay.

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

a) Free Rider: The person who benefits but doesn’t pay.

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

Work #7b, “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

Work #7b, “Basic 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 #7b, 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 #7c, Title: “Market Failures” 5) Anti-trust laws: Gov power to force biz

to break up.

Selling Simulation: “Friday Marketplace”Many people get experience earning money at a job, fewer people experience earning money through their own business. Have fun with it!No illegal, non-school appropriate, offensive, living, rotting, broken, or potentially messy items allowed

Market: Each Friday’s Market Takes Place in 2 Rounds (1 Seller Round, 1 Buyer Round)1) Sellers and buyers negotiate prices.2) Take home all items you brought/bought at the end of the marketplace.3) Carefully store your money and eventually deposit in bank.4) Buyers beware, things sold “as is”, sellers persuade them of the utility of your items..

Work #7c, Title “Marketplace”Before the Simulation:1) Write down your company name.

After the Simulation:2) Record your profits at end of the simulation3) Reflect on what can be done better to increase business next time, focus on what products are in demand (not mean you can or want to supply it) and how marketing can be improved next time (branding+advertising).

Remember, buyer beware!

Work #7f, “Closer”Before the governor (Mr Chiang) signs the

bills, he wants the voters input.1) How capitalist, socialist, or communist

are the current bills that are proposed? 2) Would you support or be against the

real CA’s legislature, if it wrote laws with the same intents as conveyed in the bills before you?

3) What do you predict to be the long term pros/cons of this legislation?

4) What changes do you think should be made to the bills?

Work #7f, Title “Closer”

Pick the 1 most important thing you learned so far to share with your partner.5) Write down a brief summary of what your partner said (include their name).6) Rate 1-10 (1: confused, 10: too easy) how well you well you mastered the last 2 weeks.

Laptop Block: 4 Participation points for the two per group who bring laptops

Homework: 1) Study today’s notes + work sections

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

podcast by next Monday.3) If assigned, please bring laptops on

block day (Tuesday/Wednesday)

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