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The Microeconomics Learning Portfolio

This learning portfolio consists of a series of short writing assignments. You will be required to complete and revise these assignments throughout the semester, and to compile and submit your completed portfolio in class on or before 12/05.

General Directions:

.Please complete ALL of the individual assignments listed below, and compile them into one document to submit by the due date. Note that some chapters do not have a corresponding assignment (e.g. chapter 1).

Follow the directions for each individual assignment closely. This sounds simple, but most of the points people lose are due to failure to follow the directions. To help with this, many assignments are broken down by components, for example A, B, C, D, etc. Please respond to these assignments by specifically addressing each component with its own paragraph.

Use your best writing skills. This assignment should reflect college-level writing ability and will be graded significantly lower if it does not. High school-level work uses proper grammar, punctuation, spelling, sentence structure, and reasonable paragraph lengths, so these components are absolutely mandatory in the learning portfolio.

There are no length requirements for the individual assignments, so please do not try to lengthen your submission by including fluff, by being redundant, or using formatting tricks. But at the same time, do not provide superficial responses. Take your time to respond to the assignments in a complete, meaningful way, and whatever length it ends up being is the “right” length.

BE HONEST! Do not work with other students on this assignment or copy things from the internet. This will result in an immediate “zero” grade on the assignment. If two people submit identical work for any portion of the learning portfolio, both parties will receive no credit for the entire assignment regardless of who the original author of the work is… If you show someone your work for any reason you expose yourself to these consequences, so don’t do it. If I provide an example to you, do not simply use my words and substitute a different example –you will get a zero on that specific assignment if you do so.

Chapter 3:

In chapter 3 we learn that the supply and demand for a good or service can shift in response to changes in certain variables, and about how supply and demand interact to determine the market equilibrium price.
Please identify a price change you have observed in the last few years. Please do not choose the price of gasoline or smart phones –thank you.
Use the supply and demand model to explain the price change you identified in A) above.
Summarize your explanation with one sentence that mentions what you think has happened to both supply and demand, and how this interaction has resulted in the price change you observed. If both curves are moving, you will need to comment on the relative size of each shift to justify the price change you observed.

Chapter 4a:

In our everyday lives as consumers we purchase many goods and services, and we derive consumers’ surplus for most of them. With that in mind, please:

Identify 3 goods or services you have purchased in the last 1 year, and estimate the amount of consumer surplus you enjoy from those purchases. Please specify both the highest amount you would have been willing to pay and the price you actually paid, and specifically state how much consumers’ you received from each item. Please do not pick cell/smart phones or gasoline; choose something else.
Please draw the demand and supply curves for one of these goods or services (they do not have to be precise), and note the market equilibrium price you paid.
Please choose a point along the demand curve that you believe represents your preferences (locate a price on the demand curve corresponding the highest amount you would have been willing to pay), and show the consumer surplus you (not anyone else) received from purchasing the good or service on the graph.

Helpful tips: Be sure to state exactly the highest price you would have been willing to pay, and the price you actually paid. The difference between these two is your consumer’s surplus. There are different phrases you can use to communicate the highest price you were willing to pay, but note that the following are incorrect:

The price you were willing to pay. Just because you were willing to pay $20 for a good, doesn’t mean this is the highest you were willing to pay.
The price you expected to pay. Again, this is not necessarily the highest price you were willing to pay.

Chapter 4b:

We are about one quarter of the way through the course. How is it going for you? Are your grades where you want them to be? If not, what can you do to remedy the situation? If you want a different result, it is imperative that you change your strategy.

Chapter 5:

 This chapter focuses on externalities in the context of producing goods and services, but like many concepts in our course, these ideas are very applicable to our daily lives. In this discussion, please:
 Identify and describe a situation where you have experienced either a positive or negative externality.
 State clearly what the external cost or benefit is.
 Estimate the dollar value of the externality. You may not be sure how to do this, so consider asking yourself the following: If it’s a positive externality, what is the highest price you would be willing to pay for the external benefit you received? If it’s a negative externality, what is the lowest price you would be willing to accept as compensation for the external cost you are bearing?
 How many people in total are affected by this externality? Recommend either a tax or subsidy amount that the externality creator should pay or receive (to “internalize the externality”) based on the number of people affected. You may assume that everyone affected has the same valuation for the externality as you do.

 Helpful Tip: Make sure that you specifically address each of the 4 elements above.

Chapter 2:
 Chapter 2 shows and discusses the gains from trade that can result when individuals, firms, or countries specialize in producing goods for which they have the comparative advantage, and trade those goods with others.
 Gains from specialization and exchange can be seen in many situations. For example, most people that we pay to do things for us (e.g. grow our food, cut our hair, tutor us, etc.) perform the task for a lower opportunity cost than we would bear if we were to do it ourselves. This is where the gain from trade that benefits both parties comes from, and is why it is rational for you to pay for the service.
 Here is an example: I had a plumbing issue at my house and decided to call in a specialist (the plumber). A guy came to my house, worked for a couple of hours, fixed the problem, and charged me $200. I could have done the work that he did, but I would need to spend the time to learn to be a plumber and/or do the job properly, and then actually do the job. It made more sense to pay the plumber (an individual who specializes in producing plumbing work and trades that with people like me), because I give up less time earning the money to pay him than I would give up learning to do the job and, then doing it.
 In the language of economics, the plumber and I made a mutually beneficial exchange because we had differing opportunity cost. Measured in hours, the plumber gave up a couple of hours, where as I would need to give up at least 20 hours to learn and perform the job. This differing opportunity cost is why we have room to make a mutually beneficial exchange. The price of $200 is a value between 2 hours and 20 hours. I agree to pay $200 because the 20 hours of free time I enjoy instead of learning how to do the job, then doing it, is more valuable to me than $200. The plumber accepts $200 because two hours of his time is worth less to him than $200.
 The textbook chapter uses comparative advantage examples where parties trade apples directly for cherries, as if they were in a barter system. In the real economy we use money as a medium of exchange so that we don’t have to trade good for good. –Can you imagine if every time you wanted to buy something you had to find someone with that good, and had to try to convince them that they wanted to trade for something you had? Money eliminates this “double coincidence of wants”, and is a topic we consider in detail in chapter 14.
 To show that you understand how comparative advantage, specialization and trade works in the modern economy, please specifically address each paragraph below.
 1. Think of a service you paid for recently. What would you have to go through to be able to perform the task you paid someone else to do (and to perform it equally well)? Please be very specific and identify/estimate the amount of time you would need for the education/training and performance of the task if you were to do it yourself instead of paying someone else to do it.
 2. Instead of going through all of that training, education, effort, etc., you decided to pay someone else to do the task. How long did you need to work to get the money to pay for the service? (If you don’t have a job, think of a job you are qualified for, guess the wage earned, and estimate how long it would take.)
 3. Compare the time you discussed in A) above, to the time required to earn the money to pay for the service as discussed in B) above. Please explain why it made sense to pay for the service to be performed rather than doing it yourself. Hopefully you paid for the task to be performed by someone else because you gave up fewer resources than you would if you did it yourself -in other words, because they had a lower opportunity cost than you (and therefore the comparative advantage.)
 I encourage you to think about the implications of this idea in the context of your educational goals. Many students are in college in large part because they believe they will earn more money as a college graduate. You can only realistically expect this outcome if, while in college, you develop a comparative advantage in performing a highly valued task (like accounting, nursing, or if you continue on to graduate school, you could be a lawyer, doctor, professor, etc.). If you get a degree in a field that doesn’t provide access to jobs, or if you don’t work hard and don’t learn anything, you will not have a comparative advantage in performing a highly valued task and cannot expect higher wages as a result of your schooling.
 4. Do you have a comparative advantage in producing any goods or services? (Of course you do!) What are you good at -that you could do at a lower opportunity cost than the typical person? Hint: think about any hobbies you have. Or if you are employed, think about your typical work functions.

Chapter 10 Reflection:

We are a little bit more than half of the way through the course. How is it going for you? Are your grades where you want them to be? If not, what adjustments can you make to improve the situation? Please respond to these questions in a writing of less than one page (a paragraph may be sufficient).

Chapter 11:

Although most of the concepts developed in chapter eleven pertain to businesses, many of the different notions of cost can be applied to your life. In a writing of no more than one page, please identify a fixed, variable, marginal, and implicit cost that you have paid in the last few years.

Chapter 12:

Many difficult or important jobs in our society pay surprisingly low wages. For example, babysitters, social workers, nursing home workers, seasonal lifeguards, and paramedics, all typically make around $15 per hour or less, but provide services that can save lives.

This phenomenon can be explained via the supply and demand model we developed back in chapter 3, or from related material we learned here in chapter 12 if we view the worker as a business owner selling their labor services.

We know that if barriers to entry into an industry are low, then businesses cannot expect to earn long-run profits. This implies that jobs that require little or no training (read: low barriers to entry) should not expect to get paid much.

For this chapter’s learning portfolio assignment, please:

-Identify a job that you think earns surprisingly little given the task(s) performed
-Discuss the training necessary to get the job
-Discuss what you think the job “should” earn, and try to justify it
-What do you think would happen if the government mandated the wage you suggested in 3) above. Please apply the lessons from the material on price floors from chapter 4 in your response

Chapter 13:

Many businesses operate in the “monopolistically competitive” environment. As we learned in chapter 13, economic profits are possible in this setting, but only to the extent that a firm can continue to differentiate itself from competing firms or produce goods at a lower cost than competitors. For example, Starbucks recently announced that it plans to offer beer and wine for sale after 4 in the afternoon in some markets. Certainly this differentiates it from other coffee shops.
For this chapter’s learning portfolio assignment, please:

-Identify a business operating in the monopolistic competition setting.
-List the assumptions of monopolistic competition and explain how the business fits in with these assumptions
-Suggest a way that this business could differentiate itself from its competition

Chapter 15a:

Please name a good or service you or your family has purchased in recent months from a monopolist. How did the monopoly come to exist? Do you think you would have benefitted from increased competition in the market for this good or service? Why or why not?

Chapter 15b:
To maximize the probability you succeed at the college level, you may benefit from thinking critically about your role in the learning process.

Matters to address

With that in mind, please (purely for your own benefit) reflect on your experience in our class, and address the following:

  1. Realistically, how much work did you put into the course? Was it more or less than what you thought you would need to do?
    2.If you would prefer to earn a higher grade than what you are expecting, what could you do in the future to improve your chances of earning that higher grade? Are there any steps you can take to improve your organization? What could you do to make better use of the time you allocate for studying (e.g. take a “study skills” course)? Should you be allocating more time to studying? Should you take fewer classes?
  2. In this course we have used several different methods to try to stimulate learning: book reading, lecture, homework questions, articles and (maybe) videos discussing applications of economic theory, discussion with other students, preparation for quizzes/exams, learning portfolio assignments requiring you to identify economics in your life, and possibly tutoring and/or office hour. Reflecting on these experiences will provide you with useful information about who you are as a student, and what sorts of experiences maximize your ability to learn. So please relax for a minute, reflect on these various exercises, and comment on which you feel worked well for you, and which did not. How can you use this information to improve the likelihood you will succeed in future classes?

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